Tax allowances worth thousands of pounds are going unclaimed by owners of Furnished Holiday Lets. Claims must be made by 5th April 2011, which is when the government are planning to close the door on it.
The Inland Revenue (HMRC) have laid down the criteria for claimants to offset Capital Allowances against their total income including rental income. The final date for this claim to be made is the end of this financial year. Owners of FHLs can claim against the purchase price and various fixtures and fittings such as air conditioning, electrical cabling and other things integral to the fabric of the building.
The definition of an FHL is a property in the UK or within the European Economic Area, which is furnished and available for letting for holidays for at least 140 days per year, and is actually let for a minimum of 70 of those.
Many accountants will not prepare capital allowance claims, preferring to leave it to specialist tax firms, as there are severe penalties for submitting false claims.
The managing director of one specialist tax company estimates that over 97% of eligible holiday home owners are unaware that they could claim this allowance.
We have reported on FHL’s with regard to Capital Gains Tax and offsetting rental income against other income in March 2010 and July 2010 respectively.
26th January 2011