Furnished Holiday Lets - Are you Ready for the Changes
The tax rules in respect of furnished holiday lets are changing from 6 April 2010 but action now may secure some of the current benefits.
Currently furnished holiday lets enjoy the following tax advantages:
Profits are counted as earnings for pension purposes
Losses may be offset against other income in the various tax years
Capital allowances are available on plant and machinery used in the accommodation
Entrepreneurs Relief may be available for capital gains, effectively reducing the tax payable from 18% to 10%
Unfortunately from 6 April 2010 all of the above benefits will disappear.
WHAT ACTION IS REQUIRED NOW?
Before 6 April 2010 consider banking Entrepreneurs Relief and pay tax at 10% rather than 18% by either:
o Selling the property or
o Gifting the property into a trust or
o Gifting the property down a generation
Consideration will need to be given to bringing forward the sale of a property to pre 6 April 2010 if you wish to rollover the gain
Pension contributions may need to be reviewed for current and future years
Provision may need to be made for increased tax liabilities through loss of furnished holiday let losses against other income.
For further information please email advice@saint.co.uk
