Tax advantages of furnished holiday lettings

The changes to capital gains tax after April 2008 mean that taper relief will no longer be available. One of the key advantages of furnished holiday letting status was that they were treated as business assets for taper relief purposes. The potential for a 10% rate of capital gains tax on disposal was very beneficial. The 2008 Finance Act however ensures that furnished holiday lets will qualify for the new Entrepreneurs relief. Therefore gains of up to £1Million will only be taxed at an effective 10% in the same way as under taper relief. There are still a number of other tax advantages to furnished holiday let status. These include:

Ability to claim rollover relief to defer capital gains

Ability to claim gift relief to defer capital gains

Sideways loss relief This latter benefit is one of the main advantages. If a loss does result from the furnished holiday let trade this can be offset against other income such as employment income. By contrast a loss on 'normal' property letting can only be offset against other rental income of the current or future years.