| The government has
launched a consultation on the tax rules
for furnished holiday lettings. The
consultation, which runs until 22 October,
focuses on proposals to ensure that the
tax rules for furnished holiday lettings (FHL)
fully comply with European Union law and
are better targeted at businesses that are
run commercially for profit rather than
for personal use.
Provided that certain conditions are
met, FHL have been treated as a trade,
which can bring more generous tax
treatment than for normal let property in
areas including some capital gains tax
reliefs and capital allowances. The
proposals out for consultation are:
- to increase the minimum period over
which a qualifying property is available
to let to the public during a year from
140 to 210 days
- to increase the minimum period over
which a qualifying period is actually
let to the public from 70 to 105 days a
year
- to restrict the use of loss relief
from FHL so that it can only be set
against certain income from the same
business.
With the new tax treatment planned to
take effect from April 2011, FHL owners
may need to review their position before
the changes are introduced.
LINKS:
HMRC guidance
HMRC consultation document
Meanwhile, HM Revenue & Customs (HMRC)
has clarified the position on the
valuation of wine cellars for inheritance
tax (IHT) purposes.
The August issue of the HMTC Trust and
Estates newsletter says that “information
in the public domain” indicates that wine
cellars are valued at the purchase price
rather than the value at the date of death
for IHT.
But it says that Section 160 of the
Inheritance Tax Act clearly states that
the value of any property for IHT purposes
is “the price it might reasonably be
expected to fetch if sold on the open
market at that time”.
It adds: “Therefore it is clear that a
wine cellar must be valued at its open
market value for Inheritance Tax purposes
at the time of the relevant occasion of
charge.”
LINKS:
Inheritance Tax and Trust Newsletters
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