Furnished Holiday Lets – Capital Allowances

Urgent Action May be Required

Chancellor, Jeremy Hunt stated in the budget of March 2024 that the beneficial tax status of Furnished Holiday Lets is to be withdrawn with effect from the start of the 2025/26 tax year. A subsequent clarification from HMRC to the Institute of Chartered Accountants in England and Wales (ICAEW) has stated that provided an FHL was let for one night in the 24/25 tax year and qualifies within the twelve month anniversary of that date, then capital allowances may be claimed in the 24/25 tax year. Then capital allowances claimed (or losses) may be carried forward. This does introduce a degree of urgency into establishing if your FHL does qualify and the extent to which capital allowances are claimable.

We would encourage anyone who wants to establish their  legal position to contact us either directly by telephone, or email, or by completing the free estimate form

Do you own a furnished holiday let?

Are you the landlord of a furnished holiday let? If so, you could be entitled to claim capital allowances for  your furnished holiday property. This is a tax allowance in lieu of depreciation of capital assets which is not allowable for tax purposes. Many holiday home owners are unaware they are entitled to make a claim. When it comes to capital allowances, furnished holiday lets owners may not realise they can claim against a variety of capital assets in the property, including heating systems, electrical systems, sanitary ware, kitchens and much more.

Who qualifies for capital allowances?

If you rent out your property commercially on a short term let basis and the accommodation is furnished, you may qualify for capital allowances for furnished holiday lets. The property will need to satisfy a number of other conditions, including how much of the year it is available for the public to let (currently 210 days a year), and the pattern and rate of occupancy – the property must be used primarily for short-term holiday stays, (currently let for 105 days per year), in order to qualify.

Whether you own one or multiple properties, you could stand to gain from this form of tax relief. If only some of your properties meet the requirements, you can apply to average out certain criteria such as occupancy rates amongst all of your properties.

What can I claim against?

If a property qualifies for capital allowances furnished holiday lets owners can claim against a number of fixtures and assets. These include furniture and household equipment but more importantly heating and electrical systems, hot and cold water systems, sanitary ware, kitchen furniture and much more. These additional assets need to be professionally valued by experts such as ourselves.

How do I apply?

If you think your accommodation might be eligible and you want to find out more, contact Curtis Plumstone Associates. We’re specialists in handling this type of claim and have a proven track record of successful results including multiple testimonials. Send us your details using our online form and we’ll get back to you with a free review of your eligibility including a capital allowances estimate and the basis of our fees.

For a more detailed information on what you need to consider as a furnished holiday let owner also check out our Blog on the subject which is available by clicking here

The owners of five new build furnished holiday lets approached us to undertake capital allowances claims on their properties. For these properties located in Porth, Cornwall, the capital allowances ranged from circa £123,000 to £145,000 per property. This meant an minimum tax saving of circa £23,500 per property.

This beautiful Grade II listed building in Frome, Somerset was purchased and totally refurbished by the owners. It has seven bedrooms, three bathrooms and an outdoor swimming pool.
The costs of refurbishment was well in excess of £0.5m and capital allowances identified were £386,310. This means a total tax saving, over time, of circa £178,000 for a 45% Income Tax Payer.

To view the property in more detail and book a stay click here

This furnished holiday let based in the West Country resulted in two capital allowances claims. One which covered the original purchase of the property and the other to cover an extensive re-development project. The final result was a combined capital allowances claim of £306,341 which means a tax saving over time of £61,250 assuming an income tax rate of 20%.

This luxury furnished holiday let is located on the prestigious Sandbanks area near Poole in Dorset. It initially cost the buyer £1.154m and produced a capital allowances claim of £222,431. This represents a tax saving over time of over £100,000 for a 45% income taxpayer. It should be noted the final capital allowances figure was below our initial estimate which reflects the high land value at the location which although we had predicted was even above our original expectation.

This combined furnished holiday let and marriage venue produced capital allowances of £91,098. This equates to a tax saving over time of £17,500 for a 19% Corporation Tax Payer. The claim was based on the vendor’s original expenditure on the property with capital allowances being transferred over to the new owner via a Section 198 Tax Election.

This furnished holiday lets business, based on a farm, spent £155k developing two barns. The capital allowances we identified were £50,600 which was approximately 33% of the overall expenditure. Although the tax saving over time will be circa £25,000 nearly 50% of this will be realised within a year because the owners wisely commissioned the claim very shortly after the actual expenditure was incurred. This meant they were able to increase the rate at which the tax relief was received because of the availability of the Annual Investment Allowance (AIA).

“Although retrospective capital allowances claims are possible, a claim which takes place relatively quickly after the expenditure has been incurred, can help to accelerate the tax benefits.”