More Replies to our Tax Changes article
Once again we thank you for all the responses we have receieved to our recent article on Tax Changes which could affect holiday home owners. You can read the full Tax Blow for Holiday Homes story or you can see some of the other responses we have received.
Below is some of the more recent feedback you have given us
Henrietta of Hampshire e-mails
As an owner of a holiday let for many years I shall now revert to longer-term letting because of this change in tax on holiday homes provision. The latter will cost me less and be much less work.
Mrs M of Wester Ross replies
Thank you for alerting me again to this change. It will be disasterous for us. We run the second home as a holiday letting business and are retired with this as our only income and collateral. We are unable to make the house pay for itself and due to my husbands extreme disability we need help more than most to keep the property going. Where can I write to make complaints and pleas?
Any help would be appreciated
Thanks
We reply
Dear Mrs M
May I suggest you speak to the Scottish Tourist Board, or contact your MP and ask them to support Early Day Motion 1730
Lois of Cambridgeshire
Thank you for bringing tax changes to the attention of self catering holiday home owners. This accommodation, whether let by an owner who also spends a limited amount of time there, or converted into holiday lets by, say a farm, should still qualify for tax relief and is a valuable asset for tourism in rural and seaside areas. So far as I can gather the following applies and does not affect allowable expenditure, such as advertising, cleaning etc.
Individuals who own property and let is as holiday accommodation will still be taxed on their net income (that is gross rent less deductions) The only real change in what expenses are deductible relates to the cost of furniture and furnishings.
Up to 5 April 2010 expenditure on these items is relieved under the capital allowance regime and technically is it not possible to claim the wear and tear allowance. From 6 April 2010 the system is changing so that the 10% wear and tear allowance is given instead of capital allowances, i.e. rent less allowable expenses.
If in the past any year a loss would have been from holiday lettings then that loss could be set off against other income for tax purposes (for example against a salary from a job) to get tax relief. From 6 April 2010 such a loss can only be set against other rental oncome or be carried forward for use against future rental income. Incidentally, I understand that 10% entrepreneur's relief also disappears in 2010 for when a business is sold.
If any of this is incorrect please let me know, but I do not think expenditure incurred in running the business is affected. Please note though that you should contact your accountant as to how you will be affected in your particular circumstances.
We write
Hi Lois
Thanks for your reply. I think your understanding is correct although I'm not sure which expenses will be allowable (or not), you quite rightly say this is a job for your accountant.
It is the first I've heard about the 10% entrepreneur's relief disappering when the property is sold, but it wouldn't surprise me
Any further comments on this are more than welcome and can be e-mail to us here
