Holiday home owners can claim around 20-30% of unused capital allowances of their holiday home purchase price to achieve a tax refund, but only before the end of the current tax year. Malpasso explain how.
When is a FHL more than a Furnished Holiday Let?
When it is an asset that can get you back a significant refund back from HMRC!
Over recent years HMRC has allowed an individual who has owned a furnished holiday let (FHL) either in mainland Britain or the EEA (European Economic Area) to achieve a capital allowance tax refund on their property and also on the furniture package therein. Owners have been able to offset this claim against all of their various personal incomes . This is all going to change with allowances being allowed against rental income rather than personal income (effective for purchases after April 2011).
So in order to maximise the benefit to you (and get 2 year’s benefit) the last time to make this amendment to your accounts is 31st January 2012; whether this is due to the current financial situation within the UK or just a mood of change it is essential that if you own a Furnished Holiday Let that you try to make a claim.
Criteria for a successful claim
The only criteria that we are looking for is that the purchase price was over £200k, the property has been available to let for 140 days and has been let for a minimum of 70 days and you are a tax payer (it only really becomes viable for a 40% tax payer). If you meet these criteria then all we need to do is have a short discussion with you to explain the process and then arrange for paperwork to be completed; we do the rest. The fact that there are no upfront fees and that you could be looking at a net refund (2 years) of between around £5k and £18.5k based on £200k property (dependent on the purchase date as various factors apply) means that this is something to be acted upon before the deadline.
To understand why the opportunity exists you do not need to become a tax specialist – you leave that to our team to undertake the work. Typically, and according to the official statistics it is over 90% of properties that have not been claimed, we will be able to identify around 25% of the purchase price (and furniture package) as being able to constitute ‘plant and machinery’ which hasn’t be claimed previously. This is not an oversight but rather an unknown where previously accounted for.
Our team works with you and your professional advisers to build the benefit analysis which is supported by documentation and a surveyors visit to prove the figures that will be used by you to submit and justify a tax refund. All the work is undertaken on a contingency basis so there is no risk to you and the fees payable will mean that you will be in a positive cash position even after the fees have been deducted. We will ensure that a claim is viable and will provide a safety net all through the process.
Recent Example:
“We have just had a client who instructed us on 21st June and by 27th July she had the benefit analysis as follows:-
- Purchase price - £437,750.
- Capital Allowance found £125,046.
- Net benefit after fees £33,944 which she will get back as a refund.
Sample illustration showing fees and potential tax refund.
How to initiate a claim
Capital Allowance Tax Refunds work best with the following criteria:
- A property purchase price of at least £200,000.
- A 40% tax rate payer.
- The holiday let is available for hire 140 days per annum and let for 70 days per annum.
If you fulfil these criteria, contact Malpasso for a quick feasibility check. Typically the client will received their tax refund around 45 days of initiating the process.
Complete this enquiry form or contact Steve Clarke at Malpasso: This e-mail address is being protected from spambots. You need JavaScript enabled to view it on 0845 567 3002 or 01202 697778 quoting Holiday Home Information.
