ATXP6 UK
Syllabus A1. Income tax A1a. Property and investment income

A1a. Furnished holiday lettings

Syllabus A1a)

Property and investment income

What is a furnished holiday letting?

Advantages of being classified as a furnished holiday letting are:

  1. Capital allowances are claimed on the cost of furniture instead of claiming replacement furniture relief if the accruals basis is used (Refer to Topic Capital allowances). If the cash basis is used then deduction is available for the capital costs of the furniture when paid. (Refer to Topic: Capital allowances)

  2. Annual investment allowance is 100%. (This is a part of capital allowances and can be seen in Topic: Capital allowances)

  3. Relevant earnings when calculating the maximum amount that can be invested in a registered pension scheme includes income from a furnished holiday letting. (Refer to Topic: Pensions)

  4. Rollover relief is available if the owner invests in another furnished holiday letting. (Refer to Topic: Rollover relief)

  5. Gift relief is available on the gift of a furnished holiday letting. (Refer to Topic: Holdover relief)

  6. Entrepreneur’s relief is available on the disposal of a furnished holiday letting. (Refer to Topic: Entrepreneur's relief))

    Note - the restriction to mortgage interest does not apply to furnished holiday lets.

In order to qualify to be a furnished holiday letting, the following conditions need to be satisfied:

  1. The accommodation must be situated in the European Economic Area.

    For example in Malta.

  2. The accommodation must be available for letting for at least 210 days in the tax year.

  3. The accommodation must actually be let for 105 days in the tax year.

  4. The accommodation must be let on a commercial basis. 

    This means that no one person should occupy the letting for more than 31 consecutive days in the tax year. 

    For example if the letting is let for 105 days in the tax year, it cannot be let by one person for more than 31 days at a stretch.