Furnished Holiday Lettings Saved!

Newsletter issue - May 2010.

For the last 12 months we have been warning you that the favourable tax concessions for furnished holiday lettings (FHL), would end on 6 April 2010.

The legislation to change these tax rules was included in the 2010 Finance Bill. However, as part of the horse-trading at the end of Parliament before the General Election, the repeal of the FHL rules was dropped from the Finance Bill before it became the 2010 Finance Act on 8 April 2010.

The FHL rules remain in place for the time being. If Labour regain power on 6 May 2010, the FHL rules could be abolished, possibly from 6 April 2010. However, if it is someone else that draws support from rural areas who gains control on 6 May, it is less likely that the FHL rules will be abolished in the foreseeable future.

The FHL rules can be used by any individual, partnership or company who lets property located anywhere in the UK or in any EEA member state.

The property must also comply with all of the following conditions:

'Holiday accommodation' means letting to the general public for periods which do not normally exceed a month, but this can include letting to business people for short periods as well as to tourists.

If the property qualifies under the FHL rules the letting business is treated as a trade for most income tax and capital gains tax reliefs. This means the following tax advantages apply:

The FHL property may also be exempt from inheritance tax if the owner takes an active part in the FHL business.

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