CG73500 - Furnished holiday lettings: general

TCGA92/S241

TCGA92/S241 (2) provides that the definition of ‘furnished holiday lettings’ in ITTOIA 2005/S322 to S328 (for individuals and partnerships) and CTA 2009/S264 to S269 (for companies), see PIM4100, also applies for Capital Gains Tax and Corporation Tax on Chargeable Gains purposes.

The guidance at PIM4100 should be referred to if you need to determine whether a property qualifies as furnished holiday lettings for the purpose of any of the reliefs mentioned below.

TCGA92/S241A

Properties situated within the European Economic Area (EEA) were brought within the furnished holiday lettings regime from 6 April 2011 for individuals and partnerships and 1 April 2011 for companies. (EEA properties were included on a concessional non statutory basis for tax years 2009/10 and 2010/11).

Reliefs

TCGA92/S241 (3) & (3A)

TCGA92/S241A(4), (5) & (11)

For the purposes of the reliefs listed below

  • any UK property business which consists of, or so far as it consists of, commercial letting of furnished holiday accommodation shall be treated as a trade.
  • any overseas property business which consists of, or so far as it consists of, the commercial letting of furnished holiday accommodation in one or more EEA states shall be treated as a trade.
  • all such furnished holiday lettings undertaken by a particular person or partnership are treated as a single trade.

The reliefs to which the above treatment applies are as follows.

  1. Roll-over relief under TCGA92/S152-TCGA92/S157, see CG60250C, and in particular CG61450P.
  2. Business asset disposal relief under TCGA92/S169H, see CG63950P, and in particular CG63965.
  3. Gifts hold-over relief under TCGA92/S165, see CG66880P.
  4. Relief for loans to traders under TCGA92/S253, see CG65930P.
  5. Substantial shareholdings exemption under Schedule 7AC TCGA 1992, see CG53000P and in particular CG53007.

An ‘overseas property business’ or ‘UK property business’ takes the meaning as defined in ITA 2007/S989 or CTA 2010/S1119.

Trade purposes throughout chargeable period

TCGA92/S241 (4)

TCGA92/S241A (6)

The definition of furnished holiday lettings in ITTOIA 2005/S322 - S328 (or the CTA 2009 equivalent) can be satisfied even if the property is only actually let as holiday accommodation during part of the chargeable period in question. If the property satisfies the requirements of Sections 322 - 328 (or the CTA 2009 equivalent), it is treated as being used and used only for trade purposes throughout the chargeable period in question, subject to the following exception.

TCGA92/S241 (5)

TCGA92/S241A (7)

The exception to the rule above is that the property is not to be treated as used for trade purposes at any particular time, if

  • it is not commercially let at that time, and
  • it is not available to be commercially let at that time.

Any periods during which the property is not commercially let, and is not available to be so let, solely due to the carrying out of any repair or construction work on the property, are to be treated as periods of trade usage.

Example

Laura acquired a cottage in April 2006. She immediately furnished the cottage and made it available for holiday letting.

During the period from April 2006 to October 2008, the cottage was constantly available for holiday letting and was actually let for sufficient periods to satisfy the requirements of ITTOIA 2005/S322 - S328.

In October 2008, the property was damaged in a hurricane. Laura immediately put in hand the necessary repair work which was completed in April 2009. However, she decided not to let the cottage between April 2009 and April 2011.

The lettings recommenced in April 2011 and continued, satisfying the requirements of ITTOIA 2005/S322 - S328, until the cottage was sold in April 2013.

The periods of qualifying use, treated as trading for the purpose of the reliefs listed above, are as follows;

  • April 2006-October 2008 (actually let);
  • October 2008-April 2009 (undergoing repairs);
  • April 2011-April 2013 (actually let).

The only period of non-qualifying use was between April 2009 and April 2011.

Property only partly used as Furnished Holiday Lettings

TCGA92/S241 (7)

TCGA92/S241A (9)

If only part of a property is let as furnished holiday lettings, an apportionment between the part so used and the remainder should be made on a just and reasonable basis. In particular, the approach taken for the purposes of TCGA92/S52 (4), see CG74150P, should be followed.

Private residence relief

TCGA92/S241 (6)

TCGA92/S241 (8)

Where a property which

  • has been used for furnished holiday lettings, and
  • whose acquisition cost has been reduced as a result of roll-over relief under TCGA92/S152 or TCGA92/S153

qualifies for private residence relief (see CG64200C) a special rule applies, see CG61452.