A beginner's guide to tax for a holiday let
From our years of experience in helping thousands of holiday property owners, we know that tax can sometimes be
an area that seems a little daunting, but it doesn't have to be!
Our job is to make your journey as straightforward as possible, so we've put together some need-to-know tax
information that we hope will be useful.
Declaring rental income
If you have a property registered in your name then you must declare its rental income to Her Majesty's Revenue
and Customs (HMRC) as soon as possible, as you may have to pay tax.
Qualified furnished holiday lets
Furnished Holiday Lets are treated as a trade rather than an investment. This means you could be entitled to tax
benefits such as claiming capital allowance, plus your profits will count as earnings towards your pension.
Owners of Furnished Holiday Lets are able to claim capital allowance on the property's furniture and
furnishings, along with any equipment used outside the cottage for maintenance.
Selling your holiday let and Capital Gains Tax
Owners of Furnished Holiday Lets can also claim Capital Gains Tax reliefs. This tax relief could help reduce the
amount of Capital Gains you have to pay when disposing of your holiday let.
Don't forget, our friendly team is here 7 days a week, so if you need more information then give us a
Capital Gains Tax - does it apply to holiday lets?
What is Capital Gains Tax? Put simply, it's a tax on the profit made when disposing of an asset that has
increased in value. Capital Gains Tax does apply to holiday lets; however as an owner of a Furnished Holiday
Let, you may be able to claim Entrepreneurs’ relief for traders.
We're here to ensure you have all the information to get the best out of holiday letting, so why not request a
free information pack, or call us straight away to find out how we can help? Together, we can do more for your
Do I need to pay council tax on my holiday cottage?
If your holiday let is made available for 140 days or more per year then you will be required to pay business
rates and so won't have to pay council tax. We find this is a great benefit as more often than not, holiday let
owners pay less for business rates than they would for council tax.
Need more information? Our team are here to help make sure your holiday let investment is
successful. On top of that, our pricing analysts specialize in setting the best booking price for our owners,
meaning your property will enjoy the best possible return.
What is furnished holiday lettings tax?
This is a special tax rule on rental income for properties that have qualified as a Furnished Holiday Let (FHL).
If your property let qualifies then you could claim Capital Gains Tax relief.
At this point, you may be wondering 'how does my property gain FHL status?' to qualify as a FHL your property
must meet the following criteria:
- It must be located in the UK or European Economic Area
- It must be fully furnished
- It must be commercially let
It must also be available to let as a FHL for at least 210 days of the year and must be let to the
public for at least 105 days of the year
It must not be let for long term lets (those over 31 days) for more than 155 days per year
When it comes to holiday letting, our local managers, along with our friendly in-house team, have lots of
experience and can help you with any queries you may have. So why not pick up the phone and speak with us today?
How to minimize tax on a holiday let property
The whole topic of tax might seem a little daunting at first, but we have the experience and knowledge to
support you from the get go, ensuring you have all the information you need to make your journey into holiday
letting as simple as possible.
There are a number of ways you can minimize the amount of tax you pay on your holiday let:
Capital Allowance can help you claim up to 50% back on furniture and furnishings
as well as equipment used outside your property for maintenance. You could even claim up to 100% of the
costs back for purchases that count as environmentally friendly.
Entrepreneurs’ Relief can help you reduce the amount of Capital Gains Tax you pay
when disposing of your holiday let.
Sykes work hard to make sure your holiday letting experience is as seamless as possible. Our property team
are available daily to discuss any queries you have, and whatever you need from an agent, we can help, so get in
touch for some friendly guidance. We can't wait to hear from you.