With holiday season rapidly approaching, it’s a good time to review the list of expenses that you may be entitled to for your furnished holiday let.
One of the biggest expenses almost needs no discussion. You’re well aware that Parliament upheld the tax break for you to claim relief on expenses such as mortgage interest.
The tax break allows owners of furnished holiday lets to offset against tax expenses such as mortgage interest, utility bills, council tax and running repairs.
However, there are certain conditions involved with taking this allowance:
• If your holiday home is located in the United Kingdom, you will be allowed to deduct certain expenses and tax allowances from your rental income.
• If you own more than one property, you can pool your expenses together to work out your taxable profit.
The government produced a list of qualifying rules for your income to be treated as Holiday Let Income.
• The Holiday home must be in the United Kingdom.
• It must be fully furnished.
• It must be available to be let as a holiday home for no less than 140 days a year.
• It must be let as a Holiday Home for at least 70 days in one year
• It must be let on a short term basis of no more than 31 days.
• It must be let as a Holiday home for at least 7 months of the year.
If you meet all of the above, you will be able to let the holiday home for whatever period you like in the remaining 5 months. If however a let is in excess of 31 days in this final 5 month period, then it will not qualify as a holiday let.
However, there are many other expenses that qualify for tax relief. And it’s absolutely critical that you understand what you are currently allowed to claim. Some of the most common expenses are listed below.
• Accounting Fees – This includes amounts payable in respect of the preparation of your holiday home business accounts. It does not include amounts charged for preparing your tax return.
• Advertising – This includes the cost of advertising your property on property websites, magazines etc. You may also claim for the cost of printing brochures and for the cost of postage.
• Rent/Council Tax/Insurance – All of these items you can claim against tax. Some ground work on your part to make sure that the council tax rather than the rating structure better suit your needs..
• Interest – Interest you have to pay against loans acquired to improve the property to making ready for letting together you any interest payable on loans to purchase furniture etc foe the property.
• Heating & Lighting – You can claim for your gas, electricity and any fuel charges relating solely to your holiday let property. If the property adjoins your own, then you can only claim for the portion that is let.
• General Repair – To be successful, you will have to keep the property in tip top condition, you are allowed to claim for the cost of general maintenance including painting & decorating.
• Additional Services – You may be able to claim for any additional services that you provide at the premises such as a gardener or caretaker, you will need to speak to your accountant about this.
• Outside – If you cottage has a garden, you can claim for the cost of its upkeep or for stocking it with plants etc in preparation for letting.
• Crockery/Cutlery/Bed Linen – These are all items that you can expect to replace on a regular basis, they all have a limited life especially in a holiday home, you can claim for them against tax.
• Phone Bills – If you have to use your own telephone to make calls with regard to the letting of your cottage.
• Cleaning items – Any consumables purchased for use at the holiday home are claimable, items would include, soap, washing up liquid, dusters, dishcloths, toilet cleaner, bleach, toilet roils, light bulbs, bin liners etc.
• Travelling Expenses – You may claim an amount based on your annual mileage to and from the property, providing of course it is in connection with the business. Your accountant will be able to advise you on this.
Remember, a good rule of thumb is that if the expense is solely for the use as a holiday let then you will be able to claim against tax. And always keep your receipts.
You may qualify for other expenses not listed here, let our professional advisers help. You can ask as many questions as you like.