Showing posts with label rentals. Show all posts
Showing posts with label rentals. Show all posts

Tuesday, June 9, 2015

The tax implications of using Airbnb in the UK

Airbnb is gaining in popularity every day. Just in London there are more 20,000 properties available on the Airbnb web site. With occupancy rates as high as 80% you might be tempted to convert your regular Buy to Let investment (BTL) into an short term let. While you will most probably increase your yields (yields are typically as much as twice what you can get on a regular BTL), doing so is fraught with risks that you need to be aware of.

The first question is to answer is if your property business qualifies as a Furnished Holiday Let (FHL). HMRC spells out the rules very clearly. In a given tax year, an accommodation qualifies for FHL if:
  1. The property is located in the UK or the EEA and is let commercially (i.e. with the intention to make a profit)
  2. The total of all lettings that exceed 31 continuous days is less than 155 days
  3. The property is available for letting for at least 210 days in the year (excluding your days of occupancy)
  4. You have let the property as a furnished holiday accommodation for at least 105 days in the year (excluding periods let at reduced rate to friends or let for more than 31 days).
Please note that if you business is considered a FHL, the tax treatment will be different. And you cannot just opt for regular BTL tax treatment instead. Also, all your FHLs in the UK are taxed as a single UK FHL business and all FHLs in other EEA states are taxed as a single EEA FHL business (losses cannot be transferred from one business to the other or to any other business -- no more sideways relief).

So here are the important points to consider:

Wednesday, November 16, 2011

Furnished Holiday Let Changes

Furnished holiday lets (FHL) have a special tax treatment in the UK. The rules have changed in recent years and will continue to change going forward. It was thought at some point that the scheme would disappear altogether following the extension to EEA properties in 2009 but it now seems that it's not going to be the case.

The benefit of the scheme is that it allows the business to be considered as a trade (with some restrictions) and in particular benefit from capital allowances on fittings, furnishings and also tools (such as vans) but also have access to capital gain reliefs such as rollover relief and business taper relief. While in the past it was also possible to offset losses against total income (not just rental income), this is not possible anymore since April 2011 and losses can only be offset against the same FHL business (UK and EEA FHLs are considered separate businesses).