Owners of properties used for furnished holiday lettings (FHLs) are reminded that the tax regime relating to these is set to change significantly (for the worse) next April. Under the current tax regime, such businesses have advantages for both Income Tax (IT) and Capital Gains Tax (CGT) which will be removed from 6 April 2010.
As regards CGT, entrepreneur’s relief and roll-over relief will no longer be available. Tax losses made for IT purposes will not be able to be set against income from other sources and income from FHLs will not qualify as ‘relevant income’ for the payment of pension contributions.
There are other changes regarding how profits from such businesses are calculated for tax purposes.