boshers
28-04-2009, 11:12 AM
The devil was certainly in the detail of Mr Darling's 2009 Budget Speach for Furnished Holiday Letting Owners.
The rules treating furnished holiday lettings as trading are to be abolished with effect from 2010/11.
Will the announcement force anyone to sell or prevent them from buying a holiday home for furnished holiday letting?
Baker Tilly Accountants summaried the announcement as follows:
The repeal of the furnished holiday letting rules means that, as from April 2010, these lettings will be taxed in the same way as any other property letting business. This will result in the withdrawal of reliefs for:
losses
capital allowances;
Landlords Energy Saving Allowance (LESA);
certain capital gains reliefs including business asset roll-over relief,
entrepreneurs’ relief,
relief for gifts of business assets,
relief for loans to traders;
exemptions for disposals of shares by companies with a substantial shareholding); and
relevant earnings when calculating the maximum relief due for an individual’s pension contributions.
Because the abolition is not to take place for a year and the exclusion of property in the EEA from the current rules is incompatible with EU competition rules, the existing rules will be treated as extending to any furnished holiday letting property in the EEA until the end of 2009/10.
The potential to claim relief from inheritance tax under business property relief will not be affected by abolition of the specific income tax and CGT rules because the IHT relief is based on its own rules which use a different definition of 'business'.
The rules treating furnished holiday lettings as trading are to be abolished with effect from 2010/11.
Will the announcement force anyone to sell or prevent them from buying a holiday home for furnished holiday letting?
Baker Tilly Accountants summaried the announcement as follows:
The repeal of the furnished holiday letting rules means that, as from April 2010, these lettings will be taxed in the same way as any other property letting business. This will result in the withdrawal of reliefs for:
losses
capital allowances;
Landlords Energy Saving Allowance (LESA);
certain capital gains reliefs including business asset roll-over relief,
entrepreneurs’ relief,
relief for gifts of business assets,
relief for loans to traders;
exemptions for disposals of shares by companies with a substantial shareholding); and
relevant earnings when calculating the maximum relief due for an individual’s pension contributions.
Because the abolition is not to take place for a year and the exclusion of property in the EEA from the current rules is incompatible with EU competition rules, the existing rules will be treated as extending to any furnished holiday letting property in the EEA until the end of 2009/10.
The potential to claim relief from inheritance tax under business property relief will not be affected by abolition of the specific income tax and CGT rules because the IHT relief is based on its own rules which use a different definition of 'business'.