More than a quarter of the 65,000 people with furnished holiday lets in Britain could lose their tax breaks, says Alexandra Gross in The Times. Currently, anyone with a qualifying furnished holiday let can offset any losses (i.e. ”mortgage and maintenance costs in excess of the rent”) against their personal income.
Yet under the new proposals, as of April 2011, they’ll only be able to offset those losses “against profits from the same furnished holiday lettings business”. And the property must be available to let for 210 days in any 12-month period instead of the current 140. The minimum time for which it must be let will also rise to 105 days from 70.
But the generous capital gains tax (CGT) reliefs will stay the same, says James Charles, also in The Times. Currently owners pay CGT at the entrepreneurs’ rate of 10% rather than 28%, and also qualify for CGT rollover relief, which defers the tax bill. However, according to Lorna Bourke in Citywire, many will still now choose to “exit the business, turn the properties into long-term buy-to-let investments or sell their properties”.