subject: Tax Relief Changes to Second/Holiday Homes [print this page] Tax Relief Changes to Second/Holiday Homes
Owners of holiday and second homes in the UK look set to have to endure new proposals from HM Revenue and Customs (HMRC) in relation to tax bills.
Under current guidelines, holiday homes must be let out for a minimum of 70 days in order to qualify as a lettings business and for tax relief claims, whilst HMRC is now proposing that properties must be let out for 105 days. This rise would mean that properties would have to work harder to gain their reward of tax relief. Fortunately for some owners, the growth in people opting to book a self catering holiday in the UK will help them to achieve these targets.
The new proposal from HMRC also see's a change in the structure of the tax relief itself. The change would see any losses made being carried forward against future surpluses of the same lettings business. Currently the rules allow holiday home owners to set any losses the business makes against any other income they have, leading to a reduction in tax payments.
The consultation ends on the 22nd October, by which time we will hopefully have a decision as to the next step for holiday home owners. If the new plan gets the go ahead, it will be in place by April 2011.
"The Government has proposed these changes in a bid to prevent second-home owners profiting from tax reliefs intended for genuine holiday letting businesses. However, it is critical that viable holiday businesses, which are central to the South West's economy, are not punished in the process.
"Anyone with an interest in the holiday lettings industry should respond to the consultation document, and inform the Government how these proposals will affect their business."
