Capital Allowances for Holiday Lets and Rentals
The warm spring of 2020 should have been a bumper time for owners of holiday lets like you.
The COVID travel restrictions have put paid to that and it looks like things will not get back to normal until well into July 2020. Now more than ever it is vital for holiday let owners to make sure that they are making as much use of tax allowances, reliefs and refunds as they can.
Capital Allowances are a tax relief designed to incentivise business owners like you to improve their commercial properties. They have been around for decades and are a well-recognized part of the UK tax landscape. They are allowances that provide relief to tax for expenditure incurred improving a commercial property. Any item of expenditure which has an “enduring benefit” to the business can qualify for relief. From Gazebos to Garden Equipment to Grab Rails, you will be surprised at what can qualify for relief.
Within a Holiday Let at £350,000, there may be as much as £70,000 in unclaimed Capital Allowances. For a property owned by an individual that equates to a tax refund or future saving of as much as £28,000.
In most cases, their owners will not have claimed for items such as:
Heating and Lighting Systems
Entry and Exit Systems
Emergency Lighting and Fire Detection Equipment
Air Conditioning
Fittings in Communal Area
Items such as these in the property could give rise to a capital allowance totalling on average 25% of the value of the property.
There are complicated rules concerning capital allowance claims for Holiday Lettings and Rentals which put most people off claiming them.
Examples of these include:
Rules on whether a building qualifies as a Furnished Holiday Let (FHL).
Rules concerning whether it fulfils the 3 “Occupancy Conditions” in order to qualify.
Whether it fulfils the “pattern of occupancy condition”.
Whether it fulfils the “availability condition”.
Whether it fulfils the “letting condition”.
Rules on whether the furniture can be claimed for in Furnished Holiday Lets (FHL).
The separate calculation of Profit and Loss from Furnished Holiday Lets (FHL).
Whether or not you need to use your “period of grace”.
Doesn’t all that make your head hurt? Doesn’t it make you want to go and do something else less complicated?
Would you like to hear the good news? We can do all of this for you. We can manage the whole process from consolation to refund.
How do I get started?
Just contact us however you feel most comfortable and we will be in touch to get the ball rolling.
This advice was supplied by Rufus & George
