I've been renting out a furnished holiday let for three years now and have spent significant sums on capital expenditure. I've claimed these back as capital allowances. I've not made a profit on any of the three years trading and have significant accumulated losses. I now want to move into the furnished holiday let as my main residence and rent out my current house. What are the implications of doing this from a capital allowances point of view? Do I have to adjust my tax return for capital allowances/balancing charges for the year in which I do this? 

Arthur Weller replies:  

If you look at HMRC’s Property Income manual, you can see that when you start to occupy the property as your main residence, the property will stop being a qualifying furnished holiday letting, and you will have to work out any balancing allowance or balancing charge for capital allowances purposes. See HMRC’s guidance in its Help Sheet HS252 at sections 7.7, 7.8 and 7.9.