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Furnished Holiday Let set-back

Furnished Holiday Let set-back

 

Last year a case was heard before the First-tier Tribunal that found a Furnished Holiday Let (FHL) property should not be considered an investment for Business Property Relief (BPR) purposes. This was an important decision for owners of FHL businesses as it confirmed the availability of BPR for Inheritance Tax purposes. If the priority in this case had been considered an investment property, BPR would have been denied.

HMRC appealed the First-tier ruling to the Upper Tribunal who have reversed the previous decision.

It would appear that FHL property owners again need to demonstrate that the nature of any additional services provided to persons letting their property are substantial and not merely incidental to the letting property. If the additional services are considered to be substantial then a BPR claim may succeed. Otherwise the letting activity will be treated as an investment and BPR will be denied.

In the light of the further ruling FHL property owners should re-examine their Inheritance Tax position. It is possible that an appeal will be made but until then this case remains the current authority.

For Income Tax purposes there is a clear definition of FHL property. As long as your letting of a property falls within the following criteria it will be considered a FHL and treated as a trade or business.

 

Call us now on 01628 631056 or email one of our partners Geoff Knight at geoffk@knightandcompany.co.uk. Or Tracy Attard at tracya@knightandcompany.co.uk to discuss how the ruling may affect you.