Holiday-home owners should act to avoid missing out on allowances before the end of the tax year on 5 April as this could be their last ever chance to claim, says John Davies of property tax specialist Hedge Tax Mitigation.
Owners of furnished holiday lets (FHLs) can offset Capital Allowances against their total income from salary and dividends paid in Britain, as well as rental income, but the government is expected to put an end to ‘sideways relief’. As 20%-30% of the purchase price of a property could be claimed as Capital Allowances, we’re talking “large sums”, says Davies.
To qualify as FHLs, houses must be furnished and situated in the UK or the European Economic Area; be available as holiday lets for at least 140 days a year, and actually let for at least 70 of these at market rate.
Once a claim is made, it can be used to claim back tax already paid or to reduce future tax. Owners can claim allowances against around 100 items integrated into the fabric of the building, including plumbing. To avoid penalties for inaccuracies, seek specialist advice.