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Re: Tax on holiday lets
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Essie



Joined: 16 Apr 2018
Posts: 4
Location: Anglesey

PostPosted: Thu Apr 19, 2018 1:18 pm    Post subject: Re: Non residential Reply with quote

sparkJS wrote:
Well firstly the interpretation of the legislation is subjective so I think we need a tax case to refer to, to get to the bottom of it but...

We are relying on the property being non-residential i.e. not a residence. Forget the word commercial - its not relevant. A residence is by defined by the legislation as a building that is used as a dwelling. A dwelling is where people live (also the dictionary definition of a residence).

I asked my solicitor during the completion process whether they could arrange it so that I can 'live' there as my residence and the answer was no. It is not allowed and also not suitable to live there as a dwelling (due to design). It is only suitable for people to 'stay' there for a short stay i.e. holiday. Each property is unique but I'm sure a huge proportion of holiday homes are suitable to be lived in and will be classed as a dwelling. I have a dozen reasons why my property could not be lived in as a dwelling.

In the legislation, one of the exclusions as a residence is a hotel or similar establishment. There is mentioned somewhere in hmrc guidance that cases will be treated on their merits.

http://www.legislation.gov.uk/ukpga/2003/14/section/116


My solicitor went away to do some research and concluded that this was a trade (I bought through a Ltd Co - not sure if that makes any difference though!) and the purchase included Goodwill and other business intangible assets...

""it appears that the property may possibly be treated as a trade for all purposes if the following conditions are satisfied:-

1. The property is situated in the UK;
2. The business is carried on commercially and with a view to a profit;
3. The total periods of “longer term occupation” of the property do not exceed 155 days during the relevant accounting period. Please note that a period of “longer term occupation” is a letting to the same person for longer than 31 continuous days;
4. The property is available for commercial letting as holiday accommodation to the public for at least 210 days during the relevant accounting period;
5. The property is commercially let as holiday accommodation to members of the public for at least 105 days during the relevant accounting period.
""
I hope all this helps. The tax return is a self assessed tax so ultimately it is up to you to fill them in correctly. Get yourself some PFP insurance just in case!


Thanks SparkJS.
I agree re. the property being non-residential, however having spent the morning (quite literally) trawling through guidance produced by the Welsh government they include FHLs under their definition of a dwelling for higher rate purposes (LTTA 80/50, if anyone needs it!). Unfortunately it specifically references FHLs and also properties that have occupancy restrictions. I'm not happy.....
Thanks again, off to empty my piggy bank
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sparkJS



Joined: 27 Nov 2016
Posts: 57
Location: North Cornwall

PostPosted: Thu Apr 19, 2018 11:08 pm    Post subject: Reply with quote

Do you have a link to the Welsh legislation? I wasn't aware that they had separate legislation. I know the Scottish now have Land tax (or something). I'd like to read more on this for my Welsh clients.
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Essie



Joined: 16 Apr 2018
Posts: 4
Location: Anglesey

PostPosted: Fri Apr 20, 2018 6:13 am    Post subject: Reply with quote

The Land Tax was introduced from the 1st April this year. Technical guidance is here -

https://beta.gov.wales/land-transaction-tax-technical-guidance

You can calculate monies due here -
https://beta.gov.wales/land-transaction-tax-calculator

HTH
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sparkJS



Joined: 27 Nov 2016
Posts: 57
Location: North Cornwall

PostPosted: Fri Apr 20, 2018 7:06 am    Post subject: Reply with quote

That isn't the legislation. It's the Welsh Assembly guidance I.e. Their interpretation of the legislation, which I have just found Schedule 5 para 36. Snippet below.

Without referring back to the UK Legislation it looks identical so it goes back to 'is it suitable for use as a dwelling'.

It's interesting that the Welsh specify FHL's when HMRC doesn't in the guidance. It will certainly generate more money for Wales as solicitors will almost certainly follow the guidance.

36(1)This paragraph sets out rules for determining what counts as a dwelling for the purposes of this Schedule.
(2)A building or part of a building counts as a dwelling if—
(a)it is used or suitable for use as a dwelling, or
(b)it is in the process of being constructed or adapted for such use.
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Essie



Joined: 16 Apr 2018
Posts: 4
Location: Anglesey

PostPosted: Fri Apr 20, 2018 12:13 pm    Post subject: Reply with quote

Sorry, I did say it was the technical guidance and this is also what my Solicitor was referred to when she rang them.

Everything you need is here -
http://www.senedd.assembly.wales/mgIssueHistoryHome.aspx?IId=15873

The section on FHLs as being eligible for the higher rates is included in LTTA 80/50 Definition of dwelling for higher rates purposes (paragraphs 35 and 36 Schedule 5). It states:
"A dwelling for the purposes of the higher rates will include holiday homes and properties let as furnished holiday lettings (including those that have restricted occupation which prevent the dwelling from being occupied all year round, and properties such as holiday park lodges)."

More than happy for you to prove a case otherwise, it will mean all the more for me to spend on G&Ts... Smile
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