We have been continuing to lobby on the implications of the changes to the tax rules for furnished holiday letting (FHL). I have been involved in discussions with a number of MPs from the opposition parties. While there have been a number of supportive comments, in terms of the implications of these tax changes, to date there has been no clear statement of intention to reverse this proposed change. Discussions are, however, ongoing.
However, I did take part in a much more positive discussion with H M Treasury and H M Revenue & Customs (HMRC) in Whitehall on 1 February 2010. I believe there is scope for some further movement in the boundary between those businesses which will be treated as land and property businesses and those that will continue to have more favourable tax treatment. There are also a number of more detailed aspects of the tax changes that are still being worked out by HMRC.
Areas of particular complexity include:
The definition of premises as far as whether the landlord is resident on the premises;
The status of FHLs for Tax Credit purposes;
The definition of dwelling for capital allowances purposes; and
The treatment of FHLs where there are other trading activities – such as a farm or a hotel.
The position of the hotels and farms is particularly complex and this is something that I am still discussing further with HMRC representatives. We are also continuing to develop our advice to clients on these matters.
I am intending to hold further briefing sessions and am looking to hold some sessions at our office in Truro on 24 March 2010. I hope that the position will be clearer by this point and we will be able to clarify what actions should be taken to deal with the transition to the new regime. I will be sending out further mailings on potential planning points and may be holding briefing sessions elsewhere but it is difficult to plan too far ahead at this point.
I trust you find this note to be helpful but if you have any more specific queries, please do not hesitate to contact me.
Yours sincerely
John Endacott
Wonder what will happen if Tories gets in?
It is better to remain quiet and have one think you are stupid, than to open your mouth and remove all doubt....
The biggest mistake we make in life is thinking we have time.
HMRC's Impact Assessment of Withdrawing the Furnished Holiday Letting Rules
Following discussions with the DCMS and The Treasury, HMRC published an 'Impact Assessment of Withdrawing the Furnished Holiday Letting Rules' to which tourism bodies were invited to respond.
To view the above and responses from:
England’s Tourism Alliance (ETA),
Wales Tourism Alliance (WTA),
VisitBritain (VB),
English Association of Self Catering Operators (EASCO),
Association of Scotland's Self-Caterers (ASSC),
Wales Association of Self Catering Operators (WASCO),
''Conservatives would restore tax breaks for holiday lets
Thousands of second home owners would benefit from a reverse of tax policies under a pledge from the Conservatives''
Although modest in scale, the Conservatives believe the tax pledge could pay electoral dividends, because several key marginal parliamentary seats they are targeting have a significant number of holiday let properties.
rather than
The Tories believe that the repeal is unfair and will reverse it in the interests of justice
?
Cynical bxstxrds inc.
Edited due to being told off for bad spelling by Big Sis
Although modest in scale, the Conservatives believe the tax pledge could pay electoral dividends, because several key marginal parliamentary seats they are targeting have a significant number of holiday let properties.
rather than
The Tories believe that the repeal is unfair and will reverse it in the interests of justice
?
Cynical bxstxrds inc.
Edited due to being told off for bad spelling by Big Sis
There have been two recent developments as far as the tax position of Furnished Holiday Lettings are concerned that I wish to draw to your attention:
1. I have seen some draft guidance to be issued by H M Revenue & Customs (HMRC) and this is more helpful than the guidance released with the pre budget report.
Whilst I do not wish to pre judge matters, I believe it is likely that we will get to a position whereby larger Furnished Holiday Letting complexes where the owners or a manager lives on site will be treated as trades for tax purposes. The precise boundaries are not entirely clear and there will be issues for those people that do not wish to have national insurance liabilities and so would rather be treated as land and property businesses. However for those that are happy to be treated as trades then this would ensure continuity of all existing reliefs.
2. The proposed legislation to give effect to the changes announced by this government have been included in the current finance bill. These measures are included at clause 61 and schedule 21.
At the time of dictating this note the general election had still not been announced although I anticipate it will have been by the time you receive this email. If the election is announced as expected then the current finance bill will be passed in to law in the next week. However this relies upon all party consent to the matters contained within the finance bill and therefore one would expect amendments to remove contentious matters if the opposition parties wish to debate them. The conservative party view remains unclear despite George Osborne’s recent statements. We will therefore be watching the position closely and you may wish to raise this point with any relevant MP’s although time is clearly of the essence.
Regards
John Endicott
It is better to remain quiet and have one think you are stupid, than to open your mouth and remove all doubt....
The biggest mistake we make in life is thinking we have time.
Thanks for posting that - it makes interesting reading.
I had the same email from John Endacott and it did just set me thinking about the distribution of this sort of information. I can't quite remember how I became aware of John Endacott's and Winterrule's campaign, but I do remember sending him an email with some hopeful ammunition. I'm now on the mailing list, and have had a few useful mails as a result. Cost to me for this advice and information (and it's coming from an accountancy and business advisory company)? Nix.
I'm a paid up member of Visit Britain, and EASCO, both of whom have been campaigning. Information received on the latest developments, or on VB's AKH website? Nix.
So a big thank you to John Endacott and Winterrule, and I won't waste my breath on VB.
So I chased up my MP who never got back to me with a statement of policy from the Con party as requested
He replied
If you have a look at the FT SAT money section you will see an article on holidy lets and at the end is a Tory pledge to resind (sic) the Governments changes yours Michael
I replied
Dear Michael,
The addition of
Would the Conservatives
do anything different?
Yes. They have said they would restore tax breaks
to owners of holiday lets.
by a journalist at the end of an article does not constitute a pledge by the Conservative party , nor is it a statement of policy by a qualified person (e.g. my MP)
As what has been said so far by Osborne has been carefully vague, can I please ask you as my MP to provide a clear statement as to whether your party would reverse the repeal of the FHL legislation. If you are unable to make such a statement because your party’s policy on this is unclear I would like to know that.
However, Financial Secretary to the Treasury Stephen Timms said: '....'If the holiday home measure doesn't go ahead the UK Government will have to pay tax relief to everyone with a holiday home within the EU."
Oh dear Mr Timms - you really don't understand the legislation do you. And you are Financial Secretary to the Treasury. The mind boggles at your incompetence!
If the holiday home measure doesn't go ahead the UK Government would have to pay tax relief to UK Tax payers with a holiday home they let out for more than 10 weeks a year within the EU.
If Labour had simply listened to the industry and just raised the limit to say 15 weeks the problem would have gone away without harming genuine business people.
Assinine and ill informed comments from the treasury are unfortunately par for the course in this daft affair.
Received this morning from EASCO. I trust they won't object to my posting the following extract, it could do them some good, and to be fair here's a link to their website: www.englishselfcatering.co.uk
EASCO NEWS SPECIAL EDITION
The proposal to abolish the Furnished Holiday Letting Rules has been dropped from the Finance Bill in a last- minute parliamentry deal to enable the Bill to pass into law before the general election on May 6th.
EASCO News understands that the qualifying threshold will be raised to 20 weeks, so the rules will only apply to properties that are actually let for 20 weeks in the year. Currently the rules apply to properties that are actually let for 10 weeks in the year.
Because the general election has been called, the Finance Bill has to be rushed through parliament. The Conservative
opposition have negotiated with the government to agree terms for supporting the Bill. Several controversial things have been dropped to allow the Bill a rapid passage.
The sudden reversal of policy may be short-lived. If the Labour Party wins the general election, the measure may well be re-introduced.
The surprising policy reversal means that self-caterers are well advised to make sure that their cottages and flats are let for 20 weeks in the financial year just starting.
ps Nothing on the AKH website yet (that's the information arm of VB). Their current "hot news" is still
