This category is about all aspects of Holiday Home Letting and will be of interest to owners of holiday lets across the UK. As Holiday Home Insurance Specialists we are proud to share tips, guidance and articles.

Whether you own an individual holiday home or cottage or a holiday cottage complex our holiday home letting articles are for you. Subjects covered include taxation, online scams and regulations.

Check out these posts: Holiday Letting Terms and Conditions, Registration Schemes for Short Term Lets, Buying a Leasehold Apartment to Holiday Let, Holiday Lets and Tax – what you need to know.

Selling your holiday home

Tips for selling your holiday home as a going concern

Selling your holiday homeLooking at selling your holiday home after years of welcoming paying guests? Whether you’re selling your treasured property to move on to pastures new or ready to retire from holiday letting, there are a few things to remember when it comes to putting your holiday home on the market as a going concern.

Consider timing when selling your holiday home

Having provided self-catering accommodation to the tourism trade you’ll know how important the peak season is to your holiday letting business, so it’s essential you take this into account when it comes to selling your holiday home to any potential buyer.

Putting your property on the market in the middle of the summer can be problematic; how will people be able to view the property when it’s occupied?  It can also mean that by the time the deal is done they’re into the winter months, and a further six months until the peak season (and revenue) rolls into town again.

Ensure you give yourself and potential buyers plenty of time to exchange contracts and get prepared for the peak letting season. Talk to your holiday letting agency and discuss how you can work together to sell your home as a going concern. Speak to local estate agents in order to find out when the most popular and appropriate times are to sell holiday homes in the area.

Property information

Marketing your holiday home correctly could be the key to maximising the interest you’re able to gain.

Alongside property specifics, we recommend creating an information pack with a break down of the business’ ins and outs, especially if you’re selling as a going concern.

What to include in the pack?

Consider the types of information a buyer would need in order to make an informed decision:

  • How much rental income do you receive per year?
  • When is your main season?
  • How many of your visitors return year on year? Particularly significant on any marketing expenditure that needs to be made in the future.
  • Where do bookings come from? Is there a successful existing relationship with an agent that needs to be continued?
  • Promotions: have you offered any discounts during the quieter months or even peak season?

Taxes and legislation

When it comes to selling your holiday home you’ll need to be fully aware of any taxes and tax-relief schemes that could apply to you. These could include Capital Gains Tax, Entrepreneur’s Relief if terminating your holiday home business, or Roll Over Relief if taking the business elsewhere and your holiday home is classed as a Furnished Holiday Let (FHL).

Research thoroughly with your accountant to ensure you’re fully clued up before you make that important decision to sell!

Also be aware that buyers will be paying an additional 3% in stamp duty from April 2016.

Presentation

As obvious as it may seem, presentation is key when it comes to selling your holiday home. Potential buyers will not only be looking at the property for themselves, but more importantly on behalf of their visitors.

Welcoming viewings after a long summer season when your holiday home is feeling and looking weary mightn’t do your property justice, so if it does require maintenance or a lick of paint, ensure these tasks are completed before putting it on the market.

Specialist holiday home insurance

If selling as a going concern, potential buyers will want to know about the property’s insurance history. Never made any claims? By highlighting this, it provides reassurance about the holiday home and your visitors. If you have had claims for flooding then you’ll be required to declare those to the new owners.

Once the property is about to change hands we’re able to make all of the adjustments to your holiday home insurance to ensure you and your buyers have one less item to worry about. We would be very happy to provide quotations for prospective buyers so please remember to refer them to us. If you’re reading this with intention of buying a holiday cottage then you may find the following article of interest:

Boshers offer specialist holiday home insurance to owners across the UK. For more information on how a specialist insurer can help and support you if you’re buying a holiday cottage to let, please give us a call on 01237 429444.

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buying a holiday cottage

Buying a holiday cottage to let

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buying a holiday cottageThe tourism industry is now worth more than £137 billion to the UK economy and with the latest Census figures showing that more than 1.6 million people in England now own a second home, could you be ready to join the queue of people buying a holiday cottage and welcoming guests through their doors?

We take a look at six areas to consider when buying a holiday cottage to let…

Location – an important consideration when buying a holiday cottage to let

If you’re deliberating over buying a holiday cottage to let, the likelihood is that it’s going to be away from your current place of residence. This comes with some added considerations; areas popular with tourism often carry with them a premium price, and also require a local knowledge to ensure you’re in the right place.

In some locations the difference a mile can make in potential rental value you can expect to gain, and the price you’ll have to pay can be massive.

Ensure you do your research; speak with a number of local agents, and also visit a range of properties in the locality to allow you a greater understanding of the market. You want to make sure what it is you’re buying is going to give you an adequate return.

Size matters

Who is going to want to stay in your property, and does the size therefore make it suitable?  If your holiday cottage is likely to be full of young families from spring to summer then it’s vital you have the space in which to accommodate them. You may also want to consider the space outside of your holiday home; does it have a large garden in which children can play? Or where romantic couples can watch the sun set?

Also bear in mind that the larger your holiday home is, the more maintenance and cleaning it will require. Who will be doing that for you? Are you factoring this into your on going running costs?

Local amenities

What is it that brings people to a certain location? Whilst getting the right sized property in the right spot will significantly increase your chances of bookings, it’s important to remember that guests will actually spend the majority of their time outside of your holiday home!

Tourist attractions, restaurants and pubs, walks and beaches; all these things will make great selling points when it comes to marketing your holiday cottage and it’s vital that as an industry we all work together in order to promote the destinations in which we live and work.

Taxes

The type of property you buy and where, will ultimately boil down to how much you have to spend, but there are a few extra costs you need to take into account.

Additional taxes apply to any second home, the biggest of which is Stamp Duty. Last November the Government announced a new 3% surcharge will apply to each stamp duty band on any additional properties costing more than £40,000. These changes come into effect from April.

So if you’re looking at buying a holiday home for £250,000 bear in mind you’ll need an extra 8% (£20,000) on top. Click here for full details about Stamp Duty changes.

Registering as a Furnished Holiday Letting (FHL) will also affect your income tax, so do your research into how to qualify. More information on how to qualify can be found here:

Legislation

Knowing UK holiday letting laws before you buy a holiday home is hugely important when it comes to understanding your rights and responsibilities.

From health and safety regulations to maintenance guidelines, ensure you you’re fully clued up before making that investment. Take a look at our health and safety guidance section for more information.

Specialist Holiday Letting Insurance

Once you’ve found your perfect property, you’ll need specialist holiday home insurance to protect you from incurring financial loss if your property suffers an insured peril.

Working with a specialist means they understand the risks you’re facing, and can provide you with the cover that you really need. Whether it’s Loss of Rent cover that ensures you don’t lose out should your holiday home become uninhabitable due to issues such as storm damage, or Accidental Damage making sure you don’t end up out of pocket if a guest damages your property, our team will speak with people just like you every day and will be able to help.

Boshers offer specialist holiday home insurance to owners across the UK. For more information on how a specialist insurer can help and support you if you’re buying a holiday cottage to let, please give us a call on 01237 429444.

 

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alcohol in welcome packs

Alcohol in Welcome Packs: Is a licence required?

alcohol in welcome packsWith Christmas and New Year’s Eve edging ever closer, now may be the time of year that you consider providing some complimentary drinks for your guests as a gesture of seasonal goodwill.

On first impressions it sounds a relatively simple concept, but many holiday homeowners might not be aware of the law when it comes to providing alcohol in Welcome Packs by way of a `free’ bottle of wine or cask of local ale or cider. We’ve taken a look at current alcohol legislation and what you need to know in order to give your holiday letting guests a complimentary tipple, whilst ensuring you stay within the law.

Can I provide alcohol in welcome packs free of charge?

It may come as a surprise that the answer is actually no, unless you have the correct licences in place.

In the eyes of the law, the provision of any alcohol is not seen as being ‘free’.  This is because it’s felt that the rental a guest pays you for their stay includes the costs of the amenities they consume within your holiday home; for example the toiletries, complimentary food on arrival, and of course, any alcohol.

Your free tipple is seen as strictly part of the cost of rental, rather than free of charge.

This means that like any other alcohol provider, in order to supply alcohol in your welcome pack you would currently need to have both a premises licence and at least one member of staff that holds a personal licence.

Where do you currently stand?

If you’re looking at providing alcohol you’ll need to be aware of the Licensing Act 2003, which regulates all organisations that provide and supply alcohol, which includes your holiday home business.

Step one – Premises Licence

Under the Act there are a number of conditions that need to be met; the first of these is that you must have a Premises Licence, which would permit your holiday home to supply alcohol in welcome packs. You can apply for a licence through your local council and, once granted, your ‘licence summary’ needs to be displayed clearly at the holiday home.

Step two – Personal Licence Holder

After you have a Premises Licence the next step is to become a personal licence holder. This allows you to provide alcohol on behalf of your holiday home and works in a similar way as a driving licence, which allows you to drive any car. You can apply for a personal licence through the Government website: https://www.gov.uk/government/collections/alcohol-licensing-personal-licences

Are there changes on the way?

In a bid to make the process easier for businesses, including holiday homeowners, the Government is reducing the red tape that surrounds the Licensing Act.

Whilst we’re still awaiting confirmation on the details of this new legislation it is said to include a Personal Licence becoming valid for life (currently only ten years) and the licence holder no longer needing to be present when the alcohol is served (particularly important for holiday homeowners).

The biggest potential change for holiday homeowners could be the introduction of a new type of notice, known as CANS (Community and Ancillary Sales Notice) which will allow you to provide small amounts of alcohol in holiday home welcome packs for a minimal fee.

This type of licence would be valid for three years and save you having to apply for a premises licence, which can cost up to £1,900! It may also reduce the need for a personal licence, an extra £75.

CANS were due to be introduced by the end of this year, check out the Government website for further updates and how you can apply if it comes into effect. We’ll also let you know through our blog as soon as changes come into force.

Boshers offer specialist holiday home insurance to holiday letting owners across the UK. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.

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Holiday Home booking Contract

Guide to Holiday Home Booking Contracts – Terms and Conditions

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Holiday Home booking ContractMost holiday homeowners who look after their own bookings will have taken hundreds of reservations from happy guests over the years, but some may not be aware of the legal contract they are forming each and every time they accept a booking, and the legalities they should have in place.

Your Holiday Home Booking Contract

Once you have accepted a booking from a guest, you will normally have to honour that booking. This is because a legally enforceable contract between you and your guest has been formed, with the dates, accommodation and price becoming the terms of your agreement.

This contractual agreement isn’t limited to email or written correspondence; it can also apply to telephone conversations you had with a booking guest.

What should you have in place?

As you are entering a contract with your guest it is recommended that you have certain terms and conditions that lay out what would happen in the event of a cancellation, no-show or a curtailment. You will also want to confirm the guests responsibility with respect to property damage and list costs incurred should a deep clean be required if for example they bring a pet to the holiday home.

In order for these conditions to be enforceable you must make them clear to the guest when they book. For this reason it’s vital that you think of ways in which you can introduce your booking terms and conditions into your booking process, to ensure they aren’t missed.

What can’t you do?

Whilst your terms and conditions will be there to support you in the event a guest doesn’t arrive for their booking, or a cancellation were to be made at the last minute, they are not able to be used to excuse you from your legal responsibilities.

For example, if you had a term that indicated you were not responsible for any physical harm incurred by the guest during their stay in your property this would not negate you of the responsibility to provide your guest with a safe environment.

Best practice

You should try to keep a clear and accurate record of the arrangements you have made for each booking. This should also include any special arrangements you have made with the guest, for example preparations for an anniversary, or special accessibility requirements and allergies.

Remember, phone bookings also create a booking contract with your guest so ensure you have a list of the things you need to go through with them while they are making their booking, including your cancelation policy, how you handle deposits and your pricing.

Visit England recommend that you follow up any booking made over the phone, where practical, with an email or letter to confirm all of your terms and conditions with the guest.

The benefits of a booking agent

If you have a letting agent managing your holiday home property you’ll not only benefit from the larger shop window and exposure their marketing efforts can give you, you’ll also have the advantage of using their terms and conditions. Most agents will handle this process for you and have the terms and conditions to safeguard your interests and ensure you don’t lose out.

Gaining terms and conditions

Booking terms and conditions are a complicated area of law. For this reason, if you are looking to create terms and conditions we recommend that you consult with your solicitor.

Boshers offer specialist holiday home insurance to holiday letting owners across the UK. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.

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Holiday Letting Tax

Holiday Letting ~ A Tax Overview

Holiday Letting Tax

Holiday Lets and Tax – What you need to know

We take a look at some of the tax issues holiday homeowners need to be aware of in this article Holiday Letting ~ A Tax Overview…

Have you declared your holiday rental income?

When you begin letting a holiday home it’s imperative you tell HMRC (Her Majesty’s Revenue and Customs) about your new rental income as you may have to pay tax on it.

If you’re new to renting a holiday home or have been letting your property for some time and not yet instructed HMRC, it’s advisable to approach them in order for your case to be considered more favourably.

HMRC are currently running a ‘Let Property Campaign’; this encourages holiday homeowners to declare unpaid tax on their let property in order to gain the best possible terms on their tax return.

If you’d like to find out more about this scheme please click here to read our full article on the HMRC Let Property Campaign.

How much holiday rental income do I need to gain before declaration?

If you own a holiday home in your own name, HMRC indicate you must report any rental income above £2,500 in a year through your Self Assessment tax return.

If the rent from your holiday cottage is less than this figure you’ll need to report it to the Self Assessment Helpline by calling 0300 200 3310 (+44 161 931 9070 if you are calling from outside the UK).

What if my holiday cottage is owned by a company?

If your holiday home is owned by a company you’ll be required to show rental income in the same way as any other business income.

What costs can I claim to reduce the tax on my holiday home?

As a holiday homeowner your property may be eligible for Furnished Holiday Letting Rules, which provide potentially advantageous treatment of ‘self catering’ accommodation, treating your property as a trade (from which you create profit and a living from it) rather than an investment.

If you are able to qualify you’ll be allowed to claim capital allowances on furniture and furnishings in your holiday home, as well as equipment used outside the cottage, such as tools for maintenance.

You will also be able to claim a range of Capital Gains Tax reliefs, such as Business Asset Rollover Relief, or with many holiday homes owned by married couples, be able to allocate profits in any proportion required, irrespective of the spouses actual shares in the ownership of the property.

How do I qualify?

You’ll only be able to claim these benefits if all the following apply:

  • Your holiday home is open to guests for at least 210 days a year.
  • Your holiday home is let for more than 105 days a year.
  • No single guests stays for more than 31 days.
  • You charge the going rate for similar holiday homes in the area (referred to as the ‘market value’).

If you own the property personally, your profits count as earnings for pension purposes.

Spring Budget 6th March 2024 – Update on the Furnished Holiday Letting Tax Rules

In the 2024 Spring Budget, the Chancellor Jeremy Hunt announced the governments intention to abolish the Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaning short-term and long-term lets will be treated the same for tax purposes. Draft legislation will be introduced in due course. If passed, individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.

Click here for the latest Guidance document on Furnished Holiday Lettings Self-Assessment.

Working out your holiday home profits for tax

If you have holiday homes that qualify as Furnished Holiday Lets it’s important to work out the profit or loss from these in isolation.

This is to ensure you only claim the favourable tax conditions on qualified properties.

If you own other cottages that don’t currently qualify you’ll need to work out the net profit or loss of all of the properties, as if it is one single business.

What if your holiday home makes a loss?

Deduct any losses from your profit and enter the figure on your Self Assessment form. You can potentially offset a loss against future profits by carrying it forward to a later year, or against profits from other furnished holiday lettings (if you own more than one holiday home).

For more information on Holiday Home tax please visit:

Here are some helpful links on the Furnished Holiday Letting Tax Rules to complement the information contained in Holiday Letting ~ A Tax Overview:

Please note that this article gives only an overview of Holiday Letting ~ A Tax Overview and is not intended as Tax Advice. We suggest you take advice from a qualified professional before making any decisions in this area or contact the HMRC for further guidance. 

As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC taxation investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

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Fire Safety Law for Holiday Letting

Fire Safety Law for Holiday Letting

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Fire Safety Law for Holiday LettingThere are many different ways in which a fire could start in your holiday home. Having an understanding of the risks that fire poses to your property and your guests is vital to ensuring a safe stay in your cottage and complying with Fire Safety Law for Holiday Letting.

Complying with Fire Safety Law for Holiday Letting and completing a fire risk assessment

What is Fire Safety Law?

Fire Safety Law (known as Regulatory Reform (Fire Safety) Order 2005) was introduced in 2006 and makes holiday homeowners responsible for taking measures to protect guests from the risks of fire.

Does it apply to you?

Fire Safety Law will apply to all tourism accommodation providers including holiday homeowners; if anyone pays to stay in your property, other than to live as a permanent home, you will need to comply.

What do you need to do?

There are three core areas to Fire Safety Law compliance:

  1. Conduct a fire risk assessment
  2. Improve your fire safety measures as a result of issues highlighted in the assessment
  3. Keep the risks and measures under review

How do you conduct a fire risk assessment?

A fire risk assessment is a thorough review of the risks of fire within your holiday home, the people that will be visiting your property and the measures you need to put in place to keep them as safe as possible.

It should broadly incorporate five parts:

  1. What are the fire hazards in your holiday home?

This should highlight any area of your holiday home in which a fire could begin. The most common causes of fire in holiday homes include kitchens and cooking, electrical appliances, candles, smoking and chimneys.

Our example:

If you have candles in your holiday home the naked flame from these could be a potential fire risk.

  1. Who is at risk?

Consider who is at risk as a result of each potential hazard; do you have young families staying in your holiday home? Older guests? Disabled guests?

Think carefully about the specific risks they may face.

Our example:

Candles are of particular risk to young children who could knock them over or be tempted to play with the flame.

  1. What is your plan to keep people safe?

Having considered the potential hazard and which of your visitors is at risk, how are you going to make sure they stay safe? What can you put in place to either mitigate or minimise the risk to your guest?

Our example:

Candles will be kept out of the reach of children and placed in holders that shield the naked flame.

  1. Record, train and plan

Make a note of the hazard and any measures you have put in place to minimise the risk. These measures should be communicated to anyone that will be involved in implementing or maintaining your fire safety plan.

Our example:

It was decided that candles would now only be positioned in areas of the holiday home that children couldn’t reach and be placed inside holders.

The holiday home cleaners were instructed of the changes and asked to ensure candles were only placed in those areas and that any broken holders were replaced within 2 days.  The candle would be removed until a replacement holder was available.

  1. Maintaining your fire risk assessment

Your assessment should include regular reviews of its effectiveness. This will also allow you to identify and highlight any potential issues that have arisen since you last put your plan in place.

Our example:

When initially conducting the assessment it was decided another full review would be conducted in two months time.

The review indicated that the steps to minimise the risk of candle fire and accident had been successful, but also highlighted a new barbeque had been added for the beginning of summer; steps would be put in place to address this new potential hazard.

With many guests booked in over the coming month a review would be completed in one month rather than two.

These documents will assist you with the Fire Safety Law for Holiday Letting as a holiday home owner to comply with your obligations under the Regulatory Reform (Fire Safety) Order 2005. Click the links below to find out more:

Holiday Home Fire Safety in England and Wales:

For Self-Catering holiday cottage owners in Scotland, the Scottish Government has produced the following:

For Self-Catering holiday cottage owners in Northern Ireland, the Northern Ireland Fire and Rescue Service has produced the following PDF guide:

You may also find the following posts for holiday home owners of interest:

Boshers offer specialist holiday home insurance to owners across the UK. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.

Please note that this article gives only an overview of Fire Safety Law for Holiday Letting and we suggest you take advice from a qualified professional before making any decisions in this area if you are not confident of using the above guidance. 

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add value to your holiday home with technology

Five pieces of technology to add value to your holiday home

add value to your holiday home with technologyTechnology continues to revolutionise and push the boundaries of how we go about our every day lives. So how can we use it to reduce costs, to add value and encourage visitors to our holiday homes, all without costing the earth?

Add value to your holiday home

We take a look at some of the very best gadgets and technology you may be considering to add value to your holiday home.

  • Radiator Reflectors

More and more cottages are looking to gain bookings in the shoulder and winter months. One of the biggest costs associated with these bookings will be the ever-increasing heating bills, with any way in which these can be managed and lowered potentially very lucrative.

If your holiday home uses radiated heat, it’s highly likely your radiators will be attached to the walls of your property. This means that a high proportion of the heat emitted will be radiated into the wall and lost.

Radiator reflector panels can be attached to the majority of radiators, meaning all of your heat is radiated back into the room for your visitors to enjoy, rather than having expensively warmed heated walls! You’ll find more information on radiator reflector panels in our previous post – Ideas for holiday home owners to reduce heating costs.

  • Remote heat control

Continuing with the heating theme, systems such as Hive, Nest and Active-Heating mean you can now control the heating in your holiday home from a phone, computer or tablet, rather than having to visit your property and manually adjust.

When might this come in handy?

Particularly for owners that live a considerable distance from their holiday home or when winter month bookings are intermittent, meaning the property goes through sporadic periods of occupancy.

  • Curved televisions

Whilst we all long for a summer of beautiful sunshine, on some days the weather will conspire against us, bringing families and traveling groups together in front of the evening television.

If your holiday home caters for large groups you may be enticed by the latest craze in televisions; curved screens.

There’s nothing worse than being the person stuck on the sofa with a poor view of the television. These screens mean that every single visitor you have will gain the best view as a result of their enhanced viewing angles.

You can now watch the television from almost anywhere, with little or no loss in quality.

  • Television Recorders

Even in poor weather, your visitors will likely spend a good deal of time away from your holiday home. When arriving back they may well like to catch up on their favourite programmes; a recording system will ensure they never miss a second.

These come in many different forms, from Freeview Recorders to Sky +.

Why not ask your visitors if there’s anything they need recorded before their stay and have it set up ready for their arrival?

Yet another thing that can now be done remotely!

  • Wireless Speakers

Wires are never going to be an attractive part of your property, so with the growing abundance of technology flowing into your holiday home how do you ensure it remains more tranquil oasis and less computer server room?

Speakers often reside a long or considerable distance from their hub, particularly if you have a home cinema or music entertainment system in your holiday home.

Developments in this area mean that wireless speakers are becoming better in sound quality and also lower in price.

Trunking or wires running along the carpet line could now be a thing of the past!

Boshers offer specialist holiday home insurance to owners across the UK. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.

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tax investigations

Tax Investigations – What to do when the taxman knocks

tax investigationsLandlords including holiday letting owners are under scrutiny because the Revenue estimates that £500m is lost every year through underpayment of tax on rental income and undeclared capital gains on second properties.

Last year HMRC said that 40,000 landlords were suspected of bending the rules. HMRC has continued to urge property landlords and holiday letting owners to bring their tax affairs up to date.

They are encouraging holiday homeowners to close the gap by signing up to their Let Property Campaign, which allows landlords to claim the best possible terms on any outstanding tax for their holiday home, for more information please visit our blog post at:

With the website already receiving thousands of visits and many holiday homeowners having signed up to the campaign it is certainly worth exploring.

If you’re currently unsure if you have unpaid taxes for your holiday home or you should be declaring taxes under this scheme you can visit the link below:

You’ll answer a few simple questions and be given guidance that is specific to your own circumstances.

There is little doubt that if you are a regular reader of this blog you’re a conscientious holiday homeowner and declare your furnished holiday lettings income in the proper manner. However there is always the chance that you may be selected for a tax investigation, here’re a few pointers to consider if you are.

What happens if you do have a tax investigation?

  • Don’t Panic!

The first thing to do is remain calm; whilst tax investigations can be triggered by discrepancies in your numbers, they can also be carried out at random.

Tax investigations are broken down into three distinct categories; aspect, full and random. Aspect investigations will look into one or more areas of your tax, whilst full or (full) random investigations will examine your tax return in its entirety.

Each should be treated seriously and it is important to identity from the start which procedure is relevant to your enquiry.

  • Get an accountant before contacting HMRC

HMRC recommends that small business and holiday homeowners seek the advice of a professional in order to limit the potential costs an investigation could have.

It is important to take stock and be thorough. Your accountant will be able to provide the necessary information as quickly as possible, but only once they have a full understanding of your affairs.

Rushing this process or doing it without the aid of a specialist professional could lead to you incurring considerable costs should things go wrong.

  • Talk to HMRC when you are ready

You will have 60 days in which to respond to HMRC. Only when you are ready, and fully armed with all of the information you need, will it be time for your accountant to make contact.

As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC tax investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

Here are some helpful links on the Furnished Holiday Letting Tax Rules:

Please note that this article gives only an overview of Tax Investigations – what to do when the taxman knocks and we suggest you take advice from a qualified professional before making any decisions in this area. 

 

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How to qualify under the Furnished Holiday Letting Tax Rules

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Furnished Holiday Letting Tax RulesWhen you rent a property it is usually treated as a form of investment activity rather than a trade. For example, if you had a job and owned a second home which you let on a shorthold tenancy agreement, the property would for tax purposes often be seen as you owning it as an investment, rather than an occupation which would provide you with profit.

For a holiday homeowner this scenario can be problematic; particularly if you own your holiday home with a view to creating a profit and a living from it, making it a trade rather than a pure investment.

This is where Furnished Holiday Lettings Rules (FHL) come in, providing potentially advantageous treatment of ‘self-catering’ accommodation. We take a closer look at how to qualify under the Furnished Holiday Letting tax rules.

Spring Budget 6th March 2024 – Update on the Furnished Holiday Letting Tax Rules

In the 2024 Spring Budget, the Chancellor Jeremy Hunt announced the governments intention to abolish the Furnished Holiday Lettings (FHL) tax regime from 6 April 2025, meaning short-term and long-term lets will be treated the same for tax purposes. Draft legislation will be introduced in due course. If passed, individuals with FHL and non-FHL properties will no longer need to calculate and report income separately. In the meantime qualifying holiday lets will continue to benefit from the furnished holiday letting tax rules until the tax year ending 5th April 2025.

What are the ‘Furnished Holiday Letting’ Tax Rules?

In order for your holiday home to qualify and benefit from this advantageous taxation treatment it must first meet all of the following criteria:

  • Your holiday home must be located within the European Economic Area (EEA).
  • Your holiday home must be let on a commercial basis with a view to making a profit from the lettings.
  • Your holiday home must be furnished.

The occupation requirements

There are also several occupation requirements your holiday home will need to meet:

  • Your holiday home must be available for at least 210 days (30 weeks) in a 12 month period.
  • Your holiday home must be let to the public as holiday accommodation for at least 105 days (15 weeks) in a 12 month period. If your holiday home is new and unable to hit this occupation level it will be taken into consideration.
  • If your holiday home is occupied by the same guests for more than 31 consecutive days, that ‘longer term’ form of occupation cannot add up to more than 155 days in a 12 month period.
  • If you own more than one holiday home, an average would be taken across all of the qualifying properties meaning that if a single property fell beneath the required occupancy threshold it could potentially be buoyed up by other holiday homes that you own.

What if you have a bad year and don’t meet the requirements?

In order to continue to qualify as Furnished Holiday Accommodation your holiday home will not need to meet the occupation requirements every year.

You will be allowed to miss the thresholds for two consecutive years, with your holiday home ceasing to be qualify on the third year.

This means that as a bear minimum, your holiday home will need to meet the entire occupation requirement at least once every three years.

The benefits of qualifying as Furnished Holiday Letting Accommodation

There is a wide range of benefits associated with Furnished Holiday Letting Accommodation, which you should discuss with your accountant or another qualified professional.

These benefits include:

  • Profits from furnished holiday lets are deemed “relevant earnings”, allowing for tax advantaged pension savings to be made that ordinary letting businesses do not qualify for.
  • Capital allowances can be made on the capital expenditure you make on your holiday home. The first £250,000 of capital expenditure incurred by a person can qualify for 100% Capital Allowances.
  • If you wish to sell your holiday home a range of Capital Gains Tax reliefs, usually only available to trading ventures, can be claimed. These could include Entrepreneurs’ Relief, Roll-over Relief and Hold-over relief.
  • Many holiday home businesses will be run by a husband and wife team. In this case profits can be allocated in any proportion required, irrespective of their actual shares in the ownership of the property.

Here are some helpful links on the Furnished Holiday Letting Tax Rules:

Please note that this article gives only an overview of How to qualify under the Furnished Holiday Letting tax rules and we suggest you take advice from a qualified professional before making any decisions in this area. 

As holiday home insurance specialists we understand the needs of holiday letting owners and our policy includes valuable legal expenses cover for HMRC taxation investigations provided that the insured has taken reasonable care to submit complete tax returns within statutory time limits. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444. 

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MUSIC AND FILM LICENCES FOR YOUR HOLIDAY HOME

Music and Film Licences for your Holiday Home

MUSIC AND FILM LICENCES FOR YOUR HOLIDAY HOMEDo your guests ever play music through a radio, TV, CD or MP3 player you’ve supplied? If they do you may need a PRS (Performing Rights Society) Licence.  We explain what this is and when you may need one as a holiday homeowner. For example are you aware that the PRS do not charge a licence fee for single-unit holiday lets meeting certain criteria? Learn more about music and film licences for your holiday home and we’ll try and answer your FAQ’s.

What is a PRS Licence?

When an artist creates music, the performer, record company or other parties will own the copyright to its distribution and playing in public places.  In order to play the music you must have permission to do so from the person that owns the copyright.  A PRS licence gives you that permission.

What is a public performance?

The PRS licence is focused on public performances and not the private playing of music, for example in your car or through an iPod on the train.

Many people won’t be aware that as a holiday homeowner it is deemed a ‘public performance’ by the Copyright, Designs and Patent Act 1988, each time a guest plays music in your holiday home on a device you have supplied to them.

Do you need a PRS Licence for your holiday home?

Following customer feedback and consultation with VisitEngland and other major tourism boards, changes were made to the way in which PRS Licensing was viewed for certain elements of the tourism industry.

From 23 August 2010 the Performing Rights Society no longer charge a licence fee for single-unit self-catering businesses meeting all of the following criteria:

  • The holiday home must have three guest bedrooms or fewer
  • The holiday home must be the sole holiday accommodation business owned or operated by the proprietors
  • The holiday home must not be licensed for the sale of alcohol
  • The facilities of the holiday home must only be available to guests

If you are unsure whether you need a PRS Licence please call the Performance Rights Society, who will be able to talk you through and review your particular circumstances, on 020 7598 3666 or visit their website: 

Do you have DVDs in your holiday home?

If you provide DVDs for your visitors to watch then you’ll need an additional licence to ensure you’re not infringing UK copyright law.  This is because when buying the DVD you bought the right to watch the contents privately in your own home, rather than share those contents with your visitors.

If you do have DVDs in your holiday home please refer to these useful links, or consider removing them and asking guests to provide their own. A licence is not required where guests bring their own DVD’s to watch on a player provided as part of the general contents of the holiday home.

Remember that if you have a television in your holiday home you will also require a Television Licence, find out more here:

Please note that this article gives only an overview to some of the potential issues and considerations of Music and Film Licences for your Holiday Home and you should speak to the relevant licencing agency for further guidance.

Boshers offer specialist holiday home insurance to owners across the UK. Our policy includes accidental damage for contents including televisions, audio and video equipment with standard limits of £1500 per appliance with a total per letting property of £5000. These limits may be increased for an additional charge. For more information on how a specialist insurer can help and support your holiday home business, please give us a call on 01237 429444.

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