Furnished holiday let (FHL) in Yorkshire

Why Did Six Forward Get Involved?

This case was for three residential property purchases – one made by an individual (45% additional rate taxpayer) and the other two by a newly established limited company (of which the individual was also director), set up specifically to purchase and operate furnished holiday lets (FHLs) in a Yorkshire city. The fixtures and fittings were deemed of high quality and a small decorative refurbishment was required on each.

Two of the properties had previously been let as holiday homes and one was a dwelling house. The potential for a furnished holiday let capital allowances claim was unclear to the new owners. The accountant was also unsure so decided to seek advice from a capital allowances specialist to mitigate the risk of providing wrong advice to his client and the client missing out on valuable tax relief.

How Did We Help?

All of the properties were residential in nature but two were run as holiday lets by the vendors. However, the holiday lets didn’t satisfy the UK FHL criteria and thus were simply operated within a property business. Collectively, this excluded the vendors from claiming capital allowances. The conversion of the final property from residential to FHL status would lead to an unrestricted capital allowances claim. In sum, the nature of the transactions from both a ‘restricted’ property business and residential dwelling house perspective meant there were no pooling restrictions.

Understanding the impact of the historical ownership of the properties and how they had previously been operated, we were able to provide certainty to the accountant and client so that they could make a claim, and to ensure that they fully benefited from doing so.

Relevant Legislation For This Case

Capital Allowances Act 2001 s.11, 15, 33A, 35, 181

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