PLEASE READ BEFORE POSTING: Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Budget 2009 announces the repeal of the Furnished Holiday Lettings (FHL) rules

What do you think this means?- this was all that was in the budget report.

I bet it will be to stop you offsetting losses against income tax.
«1

Comments

  • silvercar
    silvercar Posts: 49,279 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Holiday lettings tax rules allowed any profit on the letting to be set against income tax, all other lettings count as unearned income and can't be set against income tax.

    I guess it puts holiday lettings on the same basis as all other letting.

    For the consumer it should mean that long term holiday lettings will come down in price as upto now holiday letting landlords had a tax incentive to change tenants after only a few weeks.

    May push a few holiday lets to the wall as the tax treatment makes them unviable.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Jelliebeen
    Jelliebeen Posts: 331 Forumite
    All the details can be seen at http://www.hmrc.gov.uk/budget2009/furnished-hol-lets-1015.pdf

    Basically, benefits such as offsetting losses, capital allowances and CGT relief are being repealed in 2010.

    However, up til 2010 the current benefits and rules will be extended to owners liable to UK tax with properties in the EEA, not just the UK.

    So good news in the short term. Not so good in the long term.
  • poppysarah
    poppysarah Posts: 11,522 Forumite
    I don't understand how you offset profit against income tax?

    If i have a real job of 20k a year and holiday rental profit of 20k a year - what happens?
  • silvercar
    silvercar Posts: 49,279 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    poppysarah wrote: »
    I don't understand how you offset profit against income tax?

    If i have a real job of 20k a year and holiday rental profit of 20k a year - what happens?

    Its all about losses (well paper losses) not profits.

    At the moment if you made a loss on a BTL you could put that loss against rental income but not use it to reduce your income tax on earned income. Holiday lets had the additional tax advantage that you could put your holiday let losses against your income, thus reducing your income tax bill.

    So say you had a holiday let, spent a lot of money improving it, you would be allowed to put the costs of improvement against your income tax bill.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • RabbitMad
    RabbitMad Posts: 2,069 Forumite
    Mortgage interest is what springs to mind here. Say you buy a property for £200,000 on a 5% mortgage - thats £10,000 a year in interest. If the rents from the holiday let only broke evn not including this you would be able to knock £10K of your income for income tax purposes.

    If you were a higher rate tax payer that would be equivalent to £4k

    I think this might make some holiday lets unviable and reduce consumer choice.
  • I have a holidaylet which I have run for eight years. It is very profitable so I don't offset any losses, I put down the interest only on the mortgage relating to the holiday house, not our main home and claim only for legit expenses. We do not intend to sell it.

    I can't figure out if this will change. My main question is will I still be able to claim for expenses including mortgage interest or will it be without? It would be good to have clarification on this.

    Many thanks.
  • silvercar
    silvercar Posts: 49,279 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    lucinia wrote: »
    I have a holidaylet which I have run for eight years. It is very profitable so I don't offset any losses, I put down the interest only on the mortgage relating to the holiday house, not our main home and claim only for legit expenses. We do not intend to sell it.

    I can't figure out if this will change. My main question is will I still be able to claim for expenses including mortgage interest or will it be without? It would be good to have clarification on this.

    Many thanks.

    You will still be able to claim for legit expenses but only against rental income not against PAYE. So if your rental income is lower than the expenses (say you don't let it out for many weeks this year) then you you will make a loss.

    Upto now you could have put this loss against your other income (PAYE, self-employed work or dividends or savings interest, now all you can do is declare the loss on your tax return and carry it forward to put against next year's rental income.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • Thanks for the info.

    As I've been lucky enough to make a profit each year and I'm a stay at home mum, I guess this shouldn't affect me unless I decided to sell. I feel sorry for all those people who are going to have to sell in a depressed market with probably a lot of holiday houses being put up for sale before the new rules kick in. I decided to invest in a holiday house instead of a pension or a savings account as many people have. One does wonder if pressure from the financial world has been brought to bear on the government to take these measures as they were losing potential clients who had decided to go it alone - and make a success of it compared to the pension companies.

    Most of us are just trying to provide a future for our kids.
  • I am just about to sign the contract to buy a holiday cottage to let out weekly.
    Can anyone explain to me in plain English the new tax rules from 2010-2011 for letting holida cottages? I am just about the sign contract for holiday cottage that I want to rent in the future, but I can't find a website that explains it clearly. I don't know what the rules are at the moment and what the changes mean.
    Will I be able to charge for bedding, towels to be cleaned/ironed each week?
    Will I be able to charge for cottage to be cleaned each week?
    Will I be able to charge for ongoing maintenance?
    Will I be able to charge for furniture, cutlery, washing machine etc to furnish the cottage?
    etc etc etc
    How will it affect me?
    Any help would be greatfully appreciated ??? Thank you.:confused:

    p.s. Doesn't the Government realise if holiday let landlords sell their properties then there will be a shortage of English holidays and people will holiday abroad. Meaning less money for the Government in taxation and more CO2 in flying around the world. Shows they don't really care about the CO2!!:mad:
  • silvercar
    silvercar Posts: 49,279 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    Don't know why you ever thought the government cared for CO2 unless it had £££ signs in front of it! No-one has any money for holidays, here or abroad, so factor that into your calculations.

    All genuine expenses can be claimed against rental income. The main effect of the changes is that you can't put expenses against PAYE/ savings income only against rental income. Any losses on the rental will be carried forward to next year instead.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
This discussion has been closed.
Meet your Ambassadors

🚀 Getting Started

Hi new member!

Our Getting Started Guide will help you get the most out of the Forum

Categories

  • All Categories
  • 350.1K Banking & Borrowing
  • 252.8K Reduce Debt & Boost Income
  • 453.1K Spending & Discounts
  • 243.1K Work, Benefits & Business
  • 597.5K Mortgages, Homes & Bills
  • 176.5K Life & Family
  • 256.1K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 16.1K Discuss & Feedback
  • 37.6K Read-Only Boards

Is this how you want to be seen?

We see you are using a default avatar. It takes only a few seconds to pick a picture.