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Tax information on holiday lets

Tax may not be the most exciting thing to think about when you start running your own holiday let, but it is important to consider. With our years of experience and knowledge, we're here to make the whole process as hassle free as possible and answer any queries you have about tax. Just give our friendly team a call today for free guidance.

What are the tax implications of running a holiday cottage?

There are a number of elements that can affect the taxes you pay on your holiday let, but with Sykes you won't need to worry as we're here for you every step of the way. The following is a list of tax implications to consider:

  • Allowable Expenses - these will need to be deducted from your gross rental income before you can work out your taxable profit. Allowable expenses include any costs associated with letting your property.
  • Capital Allowance - this is for your holiday property's furnishings as well as any equipment used outside the cottage for maintenance. You could even claim 100% of the cost for some environmentally-friendly purchases.
  • Entrepreneurs’ Relief - if disposing* of a Furnished Holiday Let then you could claim Entrepreneurs’ relief.
  • VAT - If your total rental income for the year does not exceed the VAT registration threshold then you will not have to pay VAT.

We want to make sure you have all the right information and plenty of help to make holiday letting work for you. To find out more, speak to a member of our experienced property team; when it comes to holiday letting, we're here to help.

* Disposing of an asset can mean selling it, giving it away or transferring it as a gift, receiving compensation for that asset or swapping the asset for something else.

What are business rates?

Those who own non-domestic properties, including holiday lets, will more than likely have to pay business rates, which are a tax to help towards the cost of local services. However, depending upon the profit your property makes, you may be entitled to small business rates relief.

If you are new to holiday letting, business rates may well be an area you're still unfamiliar with, but whatever stage you're at, we can help.

For guidance concerning all things holiday letting, get in touch with one of our property team. They are here to guide you through everything you need to know to ensure your business venture is successful.

Does my holiday let need to be VAT registered?

Most holiday properties do not need to be VAT registered, however this would depend on whether your total rental income for the year exceeds the current VAT registration threshold.

If you're seeking further information then speak with us today. Our property specialists have the knowledge to help steer you in the right direction.

Other frequently asked questions

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.

Capital allowance
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 call.

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 holiday property.

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.

How much could I earn with Sykes?

We understand that letting properties can be a main source of income and a full-time job, so we want to make sure you're offered a competitive price.

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Average potential earnings*

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*Please note that these are estimates based on historical booking data, lowest price set at 1 bedroom to max set at 4. For a more accurate price ring 01244 617719.

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