Landlords who let out holiday properties both in the UK and European Economic Area need to thank the Chancellor for an unexpected and welcome tax break, say Manchester tax experts Jack Ross Accountants. In an unprecedented moved George Osborne reversed Labour plans to scrap the Furnished Holiday Lettings Scheme, which allows landlords to benefit from full business allowances for both income tax and capital gains tax.
Umar Memon of Jack Ross says: It is a very generous scheme and the tax advantages are numerous, but the main ones are the eligibility for capital allowance on a whole host of expenditure including potentially plant and equipment in new build developments. Landlords also need to be aware of the potential for loss relief that can be offset against other income.
If that is not enough, the benefit extends further with potentially reduced rates of capital gains tax on disposal and major planning opportunities for inheritance tax. If you are lucky enough to make a profit out of your holiday lets then further relief may be available to you via pension contributions. As with any tax breaks there are several hoops to jump through in order to qualify. Mr Memon suggests that there will be a significant group of investors who have purchased holiday lets in the European Economic Area who should seek professional advice as to whether or not they can benefit from Mr Osbornes largesse.
Nothing can ever be certain in taxation and you should ensure you obtain the benefits of this opportunity since it may well be short lived.