Chris Thorpe explores the current position regarding furnished lets and their tax treatment
Normally, a property let out to tenants is an investment asset for tax purposes. However, if that property is a furnished holiday let (FHL) everything changes; the property is treated as a trading asset and the corresponding rents are regarded as trading receipts. Land rental will never normally be considered a trade, but this is an exception.
An FHL is a furnished property in the UK or EEA available for letting for at least 210 days per year and actually let for at least 105 days per year but with no long term lets (i.e. more than 31 days) over a155 day period. The 105 day criterion can be met through averaging with multiple properties, and‘periods of grace’ are available if trying times have meant the occupation rates are lower than expected. As a