Buy to let tax advantages
THE CURRENT TAX ADVANTAGES OF OWNING A HOLIDAY BUY TO LET IN THE UK
(Updated 8 September 2023)
If you acquire a holiday lodge with the intention of letting it out as a holiday home, you could enjoy a range of tax advantages.
The basic principle is that so long as certain conditions are fulfilled, furnished holiday lettings will continue to be treated as a trade, rather than an investment activity, for tax purposes.
The basic conditions
The criteria that apply for the lodge to be treated as a furnished holiday letting trade are:
- That it is furnished
- It must be available to let for at least 210 days a year
- It must be let for at least 105 days
- It must not be occupied by the same tenant for more than 31 consecutive days or if it is occupied by the same tenant for more than 31 days, no more than 155 days of such "long term occupation" in total
These requirements may be difficult to fulfil, as the owner may fail to let the property for 105 days year in, year out. However, businesses that do not achieve this target every year will be able to elect to be treated as if they met the rules in the two years following a year where the criteria are met. Consequently, so long as the new condition is met at least once every three years and it is apparent that in the years that fail it is not for the want of trying, then the furnished holiday letting status will be retained.
Should you have more than one furnished holiday let, the occupancy rules may be applied across all properties on an average basis rather than looking at each property in isolation.