HMRC win furnished holiday lettings test case
HMRC have been successful in a test case which considered the tax reliefs available for Furnished Holiday Lettings (FHL). Provided that certain conditions are met, FHL are treated as a trade for both income and capital gains tax purposes, often allowing access to valuable reliefs.
However, the inheritance rules (IHT) are different. Business Property Relief can allow up to 100% relief on business assets but FHL are not automatically included. For many years, HMRC allowed relief but have changed their policy and taken a test case, which they have won.
This means IHT would be due on the full value of an FHL.
If you have concerns in this area and would like any advice please do get in touch.
Internet links: Mercia Blog Decision