There are a number of tax incentives if you own and let a furnished holiday lets property (FHL). They include:

• Claiming Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Business Asset Disposal Relief, relief for gifts of business assets and relief for loans to traders),
• Entitlement to claim capital allowance deductions for items such as furniture, equipment and fixtures, and
• Profits earned from holiday lets count as earnings for pension purposes.

You will need to account for your holiday lets properties separately from any other rental properties and you will need to comply with the various FHL rules. They include:

• The property must be in the UK or in the European Economic Area (EEA) – the EEA includes Iceland, Liechtenstein and Norway;
• The property must be furnished. This means that there must be sufficient furniture provided for normal occupation and your visitors must be entitled to use the furniture provided;
• The property must be commercially let (you must intend to make a profit). If you let the property out of season to cover costs, but did not make a profit, the letting will still be treated as commercial;
• All your FHLs in the UK are taxed as a single UK FHL business and all FHLs in other EEA states are taxed as a single EEA FHL business. You will need to keep separate records for each FHL business because the losses from one FHL business cannot be used against profits of the other.

There are also strict rules on occupancy. To secure the FHL tax benefits you will need to let your FHL for a certain, minimum number of days each year. The occupancy rules, set on a tax year basis, are:

• Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year.
• You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year.

Do not count any days when you let the property to friends or relatives at zero or reduced rates as this is not a commercial let.

Do not count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens. For example, if the holidaymaker either: falls ill or has an accident and cannot leave on time or has to extend their holiday due to a delayed flight.

If you do not let your property for at least 105 days, you have two options (known as elections) that can help you reach the occupancy threshold.

As you can see, there are a few hoops to climb through to achieve FHL status, but the tax rewards for doing so are significant.

Long-awaited government support to help consumers meet the unprecedented increases in energy costs was announced by the Chancellor this week.

His measures have been widely appreciated, but will he need to return with more largesse to meet even more prices increases in oil, gas and electricity prices in the autumn?

What has he offered consumers?

A brief summary of the measures announced are:

• A doubling of the previously announced Energy Bills Support Scheme to £400. Energy suppliers will deliver this support over a six-month period starting October 2022. Recognising consumer concerns, this support will no longer be recovered (treated as a loan) but will be provided as a non-repayable grant.
• A £650 one-off cost of living payment for those on means tested benefits. This will be paid by the DWP in two instalments, the first in July 2022 the second in the autumn.
• A one-off £300 additional payment to pensioners paid on top of their Winter Fuel Payment.
• A one-off £150 Disability Cost of Living Payment.
• Additional £500m of funding to the Household Support Fund. This funding will be made available to Local Authorities to target support to those in need to meet rising food, energy and water bills.

How will this be paid for?

The overall cost of the above support initiatives is estimated to be £15bn. £5bn of this will be raised by a short-term Energy Profits Levy of 25% on the oil and gas industry. The electricity generation sector will also be asked to contribute but their position will not be disclosed until later this year.

No mention was made by the Chancellor of how the other £10bn will be funded.

Tax-free

The notes released by government make it clear that the grants offered in this package will not be taxed. Additionally, the means-tested cost of living payment of £650 will not count towards the benefit cap and will not have any impact on existing benefit awards.

Too little, too late?

For many working families already stretched by rising prices, there is little in the Chancellor’s announcements that will ease their current cash flow problems as the majority of the assistance announced will commence in the autumn.

It remains uncertain if the Chancellor will need to return to Parliament in short measure to extend his assistance to this wider community.