A further change introduced in 2016 prevents landlords from being able to reduce the income tax they pay on rental earnings by 10 per cent for ‘wear and tear’ to their property. Now, only the cost of replacing furniture or building work can be deducted. Add to this the slow-down in the growth of house prices amid the uncertainty over Brexit and the reasons for the decline of the residential buy-to let market becomes clear.
“Buy-to-let landlords have been hit with a range of tax measures, which taken together could seriously dent their profits.”
A furnished holiday let or FHL is a furnished property that is let for short periods. To qualify they have to meet certain criteria, all of which can be met through the Aria Resorts managed letting service and investment product.
The benefits of Furnished Holiday Lets
If you let properties that qualify as Furnished Holiday Lets, subject to certain criteria, you can claim in areas such as:
- Capital Gains Tax Relief for Traders
- Business Asset Rollover Relief
- Entrepreneurs’ Relief
- Relief for gifts of business assets and relief for loans to traders
You are also entitled to plant and machinery capital allowances for items such as furniture, equipment, and fixtures, as the profits count as earnings for pension purposes. A correctly supported claim for capital allowances can mean that a FHL will pay no tax on its rental profits for potentially 4- 8 years.
We advise you to approach a specialist tax advisor to ensure you can make the most of your investment purchase.
“Holiday lets in the UK are becoming increasingly popular, with many areas offering good yields for landlords considering a move away from residential buy-to-let” WHICH