The Sunday Times is reporting that the expected changes to the tax rules governing holiday lets are not happening. The significant tax benefits that arose because holiday letting was treated as a trading activity were scheduled to be removed on 6 April. It had been announced in previous budgets that holiday letting was to be treated as other residential letting from 6 April 2010. In a last minute deal to get approval for the budget these changes have been dropped, so that as of now the tax treament of holiday lettings is as it was last year.
See http://property.timesonline.co.uk/tol/life_and_style/property/buying_and_selling/article7093593.ece.
Frustrating for people who have made decisions based on the scheduled change, but overall it should be beneficial for owners of holiday let properties. We just don’t know how long this will last.
The benefit or otherwise of this tax is of course dependent on your own tax situation and whether you own the property in your own right, or whether you are operating your holiday letting business within a company structure. For individuals considering purchasing property to run a holiday let it is important to consider the various types of tax which could apply on purchase, management and disposal of property. Stamp duty, VAT, capital gains tax and inheritance tax are all forms of tax which can apply to property at various stages in addition to the tax on trading activity referred to here. So short term ‘good news’ might be irrelevant if owners have taken advice on the longer term issues of property management and have set up company structures for the purposes of managing a holiday letting company.
Many property owners end up in the short-term property letting business by default – perhaps when a property has failed to sell, or when they are in-between longer lets, and it is important to consider the bigger picture before embarking on the short-term letting business.
Hi Susan,
You are absolutely right, everyone does have to take account of their own circumstances.
This sort of last minute change makes it difficult to plan ahead and shows how much we all need to keep an eye out for what’s happening and be flexible and prepared to adapt if necassary when the fiscal environment changes.
Janet
Every year thousands of people enjoy getting away from it all with a self catering holiday that is preferably cheap and well within their tight budgets. Self catering holidays can come in many forms be it a 3 or 7 night stay in a caravan at popular holiday parks such as Haven or Butlins, a fortnights holiday stay in a private holiday home, cottage or apartment in Wales, even a short break aboard a boat on the Norfolk broads can be classed as a self catering holiday. These are of cause just a few examples of self catering holidays available all with varying degrees of expense and finding the cheapest prices use to be quite a chore, but since the creation of the Internet and various holiday companies and even private individuals with holiday properties to rent gaining access to website space to advertise their availability, never has it been easier to effectively search and compare prices from a whole range of self catering properties making sure people can truly get their self catering cheap.