Furnished Holiday Lettings Reinstated

Furnished holiday lettings currently have favourable tax treatment for both Income Tax and Inheritance Tax. This is because the businesses are treated as a trade and therefore losses arising are available for relief against total income and for Inheritance Tax purposes the business qualifies for Business Property Relief (BPR).

Previously the furnished holiday lettings rules were limited to UK property, but a recent ruling has decided that this is in contravention of EU law. As a result, the Government had to widen the rules to include all property within the EU, providing they met the same conditions for furnished holiday lettings as applied to UK properties.

The previous Government had decided to abolish the Furnished Holiday Letting rules from 5 April 2010, but the new Government has decided to extend the current rules to 5 April 2011, but to carry out a full review before that date to establish what will happen from 6 April 2011.