Most property owners who let property under the Furnished Holiday Let (FHL) tax rules, submit their income and expenditure details on their tax return each year.
This article considers occupancy, and the need to review occupancy of FHL properties each year.
If your FHL business accounts year is the end of the tax year, 31 March (5 April), we suggest that you take out your calculator and booking diary before this date. If you do not meet HMRC’s criteria you may lose some or all of the valuable tax concessions for which FHL businesses qualify.
Here’s HMRC’s summary of the occupancy regulations:
The pattern of occupation condition
If the total of all lettings that exceed 31 continuous days is more than 155 days during the year, this condition isn’t met so your property won’t be a FHL for that year.
Availability conditions
Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year.
Don’t count any days when you’re staying in the property. HMRC don’t consider the property to be available for letting while you’re staying there.
The letting condition
You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year.
Don’t count any days when you let the property to friends or relatives at zero or reduced rates as this isn’t a commercial let.
Don’t count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens.
The averaging election – if you’ve more than one property
A period of grace election – if your property reaches the occupancy threshold in some years but not in others.
If your initial run-through of the number crunching indicates that you may not meet the requirements to qualify as an FHL on one or more properties, please call so that we can help you check your calculations and see if the averaging rules apply in your favour.