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Holiday let shed conversion and tax
andyllwilliams
Posts: 1 Newbie
We’ve recently got planning permission to renovate a shed, next to our house, into a holiday let. Whilst we’re now going through the next stage of design and building regs approval, I’m starting to think about the tax implications.
The building is on the deeds as part of our main residence but is a separate building from the house we live in. From the research I’ve done so far, I don’t think it qualifies as a Furnished Holiday Let as it is not a separate property, nor would be suitable under the rent a room scheme as it is a separate building.
The building is on the deeds as part of our main residence but is a separate building from the house we live in. From the research I’ve done so far, I don’t think it qualifies as a Furnished Holiday Let as it is not a separate property, nor would be suitable under the rent a room scheme as it is a separate building.
My default assumption is that we’ll be able to capitalise all the renovation costs and claim capital allowances once we start trading as a furnished guest house.
Does anyone have any experience of doing similar? Or have any other ideas? I’ve not yet looked into whether VAT on construction could be reclaimed. I can’t imagine we’ll need to be VAT registered as we won’t be near turnover thresholds. ‘We’ means me and partner. We are based in Wales but tax implications would be UK wide.
Thanks for any help
Does anyone have any experience of doing similar? Or have any other ideas? I’ve not yet looked into whether VAT on construction could be reclaimed. I can’t imagine we’ll need to be VAT registered as we won’t be near turnover thresholds. ‘We’ means me and partner. We are based in Wales but tax implications would be UK wide.
Thanks for any help
0
Comments
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As far as I know there is no requirement for the accommodation to be detached from your house for it to qualify as a FHL. Plenty of people let buildings on the same plot as their home.
Again AFAIK all capital expenditure can be offset against income and you can carry forward losses from one year to another, but you must be running a business with a view to making a profit. You also need to meet the qualifying criteria of 210 nights availability and 105 nights occupied.
You're unlikely to need to be VAT registered with a single unit.
Rubbish generated by the business will be commercial waste and you'll need to get it collected on a commercial basis or have a waste carriers license and be able to demonstrate that you have disposed of it appropriately (I.e. you can't just chuck it in with your own rubbish).
https://www.sykescottages.co.uk/blog/furnished-holiday-let-tax-guide/
...provides some useful info (though through rather rose tinted glasses, coming from the perspective of trying to get properties onto their books!).
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