I had been meaning to post something about this but was reminded of the importance today by two friends on Twitter (@HenryPryor and @WAEllis1868).
Tax on furnished holiday lettings is a complicated area, so please do seek specialist advice and take a look at the Government explanatory notes which you can find here.
To make sure your property qualifies as a furnished holiday letting, it must be:
- in the UK or EEA (which France is of course)
- available for commercial letting to the public, as holiday accommodation, for at least 140 days a year
- commercially let as holiday accommodation for at least 70 days a year (the rent must be charged at market rate - not at cheap rates to friends and family)
- a short term letting of no more than 31 days
Owners and prospective buyers of French property may find it possible to save considerable sums of money through claiming tax relief called Capital Allowances on furnished holiday let properties.
The tax relief known as ‘Furnished Holiday Lettings’ (‘FHL’) has been under government scrutiny with plans to tighten up the tax rules. Finally draft legislation has been published setting out the future tax treatment of an FHL business.
The complex rules contain three nuggets of important information. Firstly, the FHL rules offer some very generous tax treatment for properties meeting the ‘qualifying criteria’.
Secondly, a significant part of the purchase price paid can be recovered through a combination of ‘loss relief’ and claiming ‘capital allowances’.
Thirdly, the FHL rules apply to holiday properties in all 32 countries across the EEA and applies both to properties acquired in the past and those bought in the future. In many cases, the result is a refund of taxes paid in previous years on total income including tax on employment income; in effect a ‘cashback’ on property expenditure.
I'm not sure if any of my historic clients are claiming this tax relief yet but I'm going to ask around (easy to do so as many of them have turned into friends, which can prove difficult in the Summer when I'm supposed to work but the aperitif invites are too good to turn down).
If I can find any real life examples of savings made I'll post them up (changing names & places of course).