Owner-Managed Businesses

Furnished holiday lets and the impact of coronavirus (COVID-19)

Produced by Tolley
  • 29 Oct 2021 11:20

The following Owner-Managed Businesses guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Furnished holiday lets and the impact of coronavirus (COVID-19)
  • Definition of an FHL and treatment for tax purposes
  • Meeting the letting condition after closing for coronavirus
  • Taxation of coronavirus support payments
  • Sale of FHL property and reporting requirements

Furnished holiday lets and the impact of coronavirus (COVID-19)

Furnished holiday lets (FHL) have been impacted significantly over the last few months by coronavirus (COVID-19) and the requirement for holiday homes to shut. This guidance note recaps the requirements for a holiday let to be treated as an FHL and reviews the impact of coronavirus on the tax position of an FHL business.

Definition of an FHL and treatment for tax purposes

An FHL is defined as a property that meets the three tests of availability, letting and pattern of occupation, as follows:

  1. the property must be available during the relevant period (see below), for commercial letting as holiday accommodation to the general public for 210 days or more

  2. the property must actually be let commercially as holiday accommodation to members of the public, during the relevant period, for 105 days or more (excluding periods of longer-term occupation, being continuous periods of more than 31 days during which the accommodation is in the same occupation other than circumstances that are not normal), and

  3. the property must not be let for periods of longer-term occupation (as defined above) for more than 155 days during the relevant period

ITTOIA 2005, s 325; CTA 2009, s 267

The word ‘normal’ is not given any specific definition in legislation, so the word takes its everyday meaning (ie ‘regular’ or ‘usual’). HMRC’s view is that what is ‘normal’ is interpreted by reference to the nature of the lettings intended by the owner rather than the lettings that take place (eg a letting might exceed 31 days and yet still qualify as an FHL if the holidaymaker fell ill, making it impracticable for them to vacate on time).

The relevant period for income tax purposes is:

  1. in a normal continuing busin

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