While these measures were clearly aimed at trading businesses, where a furnished holiday property is available to be let to the public for at least 140 days a year it is classed as a business for business rates purposes.
This means that such properties are brought under business rates rather than council tax, and where the rateable value of the property is under £15,000 and you only own one property (or more than one that together have rateable values under this threshold) then you should be eligible for Small Business Rates Relief, often meaning no rates have to be paid at all, which in itself offers a good saving compared to Council Tax for many owners of holiday properties.
Holiday lettings that are subject to business rates and qualify for Small Business Rates Relief should also be eligible to claim a £10,000 COVID-19 grant, which will help to replace lost letting income during lockdown, since many holiday homes are sitting empty during the pandemic.
Larger holiday properties that don’t qualify for Small Business Rates Relief should qualify for a £25,000 grant, plus a business rates holiday, in line with other businesses in the leisure and hospitality sectors.
You can claim for the grant through the website of the local Council where the property is situated. To do so you will need your business rates account number and rateable value, which you can find on a rates bill.
Aside from the above, furnished holiday lettings also represent a far more tax efficient investment than a normal buy to let property, as a qualifying furnished holiday let (which for tax purposes means that they must be available for let to the public for at least 210 days a year, and actually let to the public for at least 105 days a year, in both cases ignoring lettings of more than 31 days at a time), opens up the following tax benefits (not available to normal buy to let properties):
- losses can be offset against other sources of income (sideways relief);
- capital allowances can be claimed for furniture and equipment;
- there is no restriction on tax relief for mortgage interest for higher rate taxpayers;
- they are usually eligible for Entrepreneurs Relief and rollover relief for Capital Gains Tax;
- profits are classed as ‘earned income’ when considering pension contributions.