Furnished Holiday Lets

Why you should be looking at furnished holiday lets

The residential Buy to Let market has experienced a major downturn in recent years, largely due to tax implications for landlords, prompting investors to seek alternative options. Landlords are now taxed on their revenue, rather than on the profit after mortgage costs and the introduction of an extra 3 per cent stamp duty charge for property that is not the owner’s main home is another deterrent.

A further change introduced in 2016 prevents landlords from being able to reduce the income tax they pay on rental earnings by 10 per cent for ‘wear and tear’ to their property. Now, only the cost of replacing furniture or building work can be deducted. Add to this the slow-down in the growth of house prices amid the uncertainty over Brexit and the reasons for the decline of the residential buy-to let market becomes clear.

“Buy-to-let landlords have been hit with a range of tax measures, which taken together could seriously dent their profits.”

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The benefits of Furnished Holiday Lets

On the flip side qualifying, Furnished Holiday Lets can potentially achieve a tax-free rental income for up to four to eight years[1]. There’s great news for savers too, as personal income, earned through a Furnished Holiday Let, can contribute to your annual pension allowance.

A furnished holiday let or FHL is a furnished property that is let for short periods. To qualify they have to meet certain criteria, all of which can be met through the Away Resorts managed letting service and investment product.

If you let properties that qualify as Furnished Holiday Lets, subject to certain criteria, you can claim in areas such as:

  • Capital Gains Tax Relief for Traders

  • Business Asset Rollover Relief

  • Entrepreneurs’ Relief

  • Relief for gifts of business assets and relief for loans to traders

You are also entitled to plant and machinery capital allowances for items such as furniture, equipment, and fixtures, as the profits count as earnings for pension purposes. A correctly supported claim for capital allowances can mean that an FHL will pay no tax on its rental profits for potentially 4- 8 years.

We advise you to approach a specialist tax advisor to ensure you can make the most of your investment purchase.

“Holiday lets in the UK are becoming increasingly popular, with many areas offering good yields for landlords considering a move away from residential buy-to-let”

Portfolio Investment

Away Resorts also offers a portfolio investment product with a fixed return of 7% over a 3 or 5 year fixed term on our boutique barns at Retallack Resort & Spa in beautiful Cornwall. All investment options are subject to approval and terms and conditions apply.

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Get in touch

Have a question about holiday home ownership? Please fill in the form below and one of our Holiday Home Ownership Advisors will be back in touch within 48 hours.

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*The Away investment product is available on selected properties at selected resorts and exclusively to qualifying investors, terms and conditions apply.

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