PROMOTION A A quiet retreat Many of us dream of owning our en seaside or country retreat, somewhere to enjoy holidays and weekends with family and friends, so what do you need to consider if you are planning to buy your own holiday home? tisimportant to fully understand your tax position to avoid an unexpected large tax liabilities at any stage of owning it. Assuming you have the finances sorted to buy the property, the next big expense is the Stamp Duty Land Tax ("SDLT") (payable when buying a second property worth over £40k) which is calculated at a different rate if you own an existing property. If you own more than one property Finally, consider the timing of and take advice before selling the property, as a FHLand one or more doesn't meet the letting condition of 105 days, then you can elect to apply the condition to the average rate of occupancy called an averaging election. You can only average as Capital Gains Tax may be payable in the future. If you plan to rent the house out to other people to help cover the costs and you meet the criteria for Furnished Holiday Lets (FHL) then there are potential tax benefits. If your property meets the criteria for a FHL, you can claim capital allowances on your property related purchases and you are currently able to deduct all of the mortgage interest and other finance costs before calculating tax liability. across properties in a single FHL business and you can't mix UK and overseas properties, including those owned in the EEA together. If the property is only used as an FHL. and is closed for part of the year then you can deduct all of the expenses such as insurance and loan interest for the whole year, providing you don't live in it. Self-catering accommodation which is available for short-term lettings for more than 140 days in a year is subject to Business Rate Property tax. You may be able to claim Small Business Rate Relief which can be up to 100% depending on where the property is and its rateable value. Jo White is a Director of The criteria you need to meet are: Tax Advisory at Kreston Reeves jo.white@krestonreeves.com The property is available for letting for at least 210 days a year and; It is occupied by paying guests for at least 105 days a year, but the same guest can't be in your property for more than 31 days (unless it is exceeded because something unforeseen happens). T: 0330 124 1309 If your annual turnover exceeds the VAT threshold (currently C85,000) yo will need to become VAT registered. Your FHL. property income may KRESTON "REEVES automatically be subject to VAT If you run a separate business and are a VAT registered individual. Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com PROMOTION A A quiet retreat Many of us dream of owning our en seaside or country retreat, somewhere to enjoy holidays and weekends with family and friends, so what do you need to consider if you are planning to buy your own holiday home? tisimportant to fully understand your tax position to avoid an unexpected large tax liabilities at any stage of owning it. Assuming you have the finances sorted to buy the property, the next big expense is the Stamp Duty Land Tax ("SDLT") (payable when buying a second property worth over £40k) which is calculated at a different rate if you own an existing property. If you own more than one property Finally, consider the timing of and take advice before selling the property, as a FHLand one or more doesn't meet the letting condition of 105 days, then you can elect to apply the condition to the average rate of occupancy called an averaging election. You can only average as Capital Gains Tax may be payable in the future. If you plan to rent the house out to other people to help cover the costs and you meet the criteria for Furnished Holiday Lets (FHL) then there are potential tax benefits. If your property meets the criteria for a FHL, you can claim capital allowances on your property related purchases and you are currently able to deduct all of the mortgage interest and other finance costs before calculating tax liability. across properties in a single FHL business and you can't mix UK and overseas properties, including those owned in the EEA together. If the property is only used as an FHL. and is closed for part of the year then you can deduct all of the expenses such as insurance and loan interest for the whole year, providing you don't live in it. Self-catering accommodation which is available for short-term lettings for more than 140 days in a year is subject to Business Rate Property tax. You may be able to claim Small Business Rate Relief which can be up to 100% depending on where the property is and its rateable value. Jo White is a Director of The criteria you need to meet are: Tax Advisory at Kreston Reeves jo.white@krestonreeves.com The property is available for letting for at least 210 days a year and; It is occupied by paying guests for at least 105 days a year, but the same guest can't be in your property for more than 31 days (unless it is exceeded because something unforeseen happens). T: 0330 124 1309 If your annual turnover exceeds the VAT threshold (currently C85,000) yo will need to become VAT registered. Your FHL. property income may KRESTON "REEVES automatically be subject to VAT If you run a separate business and are a VAT registered individual. Kreston Reeves has offices across Kent, London and Sussex. www.krestonreeves.com