Budget 2009 - Furnished holiday lets - bad news and (a little) good news
Today’s Budget saw the publication over a hundred Budget notes, press pelease and other documents. One of these supplementary documents relates to the taxation of Furnished Holiday Lettings (FHL).
Currently, let properties in the UK, which fulfil the conditions, attract a beneficial tax treatment which means that the profits are counted as earnings for pension purposes and losses can be offset against other income.
The Government believes that the fact that this treatment is given to UK properties may not be compliant with European Law and so have decided that this should be repealed with effect from 2010/2011.
The good news is that the beneficial treatment should be extended to properties within the European Economic Area (EEA) until it is repealed. This means that that it is possible to submit amended tax returns and claim refunds in some cases.
- Returns that are still within the normal time limit for amendment can be made within that time limit.
- HMRC will also accept late amendments to personal tax returns for 2006/2007 and corporation tax returns for periods ending after 31 December 2006.
The deadline for making a late amendment is 31 July 2009.
Comment on this blog in the space provided below. Barry Hallam is a Senior Tax Manager at Mercer & Hole.
Comments (4) Read through and enter the discussion with the form at the end
As a holiday home owner in full time employment, and subject to the usual PAYE tax conditions, this a real blow! If holiday home owners were to make themselves a 'company', would this be away of continuing to be able to claim tax relief against losses and capital expenditure as at present?
Thanks, Keith
I cannot understand how you can say there is good news because the government will extend the beneficial tax to properties in the EEA.Any tax due on property rented in the EU has to be paid in that country (NOT IN THE UK)and attracts a tax credit under the tax treaty. The only way the government can reclaim this is to reclaim it from the member country under tax treaties but I cannot see the EU country playing ball on that one!I am amazed if they have agreed to it!!!!!!!!!!!
I and my husband own a holiday property in lieu of a house in which to live on account of the fact that we must rent a property where we work. We are both members of the Armed Forces, moving every 18 - 24 months, with 2 children, and bought a property merely to get on the ladder, somewhere where we might be happy to live when we leave in 3-4 years. It still costs us something in the region of £6K per year to keep this property, this includes holiday rental income, tax relief and all outgoings, which is quite reasonable, but of course we are also funding a rental property, where we must live with all the normal associated bills of any other working family. It is disappointing that our particular situation will be disadvantaged by this ruling, as we valued the chance to be able to buy our property at a time of our choosing and afford it whilst sustaining our normal daily lives, but I do appreciate that many such properties are run in a true business capacity, and now 4-5 years down the line, I'm sure this will not cripple us. So, whilst we are not devastated by this news as it will not push us into selling any sooner, it's still a shame for our, no doubt, unusual situation.
Keith
As a holiday home owner in full time employment, and subject to the usual PAYE tax conditions, this a real blow! If holiday home owners were to make themselves a 'company', would this be away of continuing to be able to claim tax relief against losses and capital expenditure as at present?
Thanks
Barry