H O L I DAY H O M E O W N E R S H I P | TA L K I N G B U S I N E S S
Capital Allowances; Good business practice or fat cat tax dodge? It’s a constant argument and theme
Capital allowances are available of course on
on the news-tax avoidance is legal and
items bought such as furniture and fittings
even promoted by the government and
but there is a more complex area related
everybody else- your personal allowances
to items that are built into the property and
for income tax, capital gains tax and your
were acquired with it. Now before I go any
ISA are all ways of avoiding tax and to be
further let me make it clear that I am not an EVERYTHIN G F O R T H E H O L I D AY H O M E O W N E R accountant or tax advisor, I may not be up I N S A N Dto B ANKS & SURROUNDING AREAS and not declaring it is illegal whether it’s date on latest legislation or even correct encouraged. Accepting cash for something
£50 or £1m hidden in an offshore account. about of the rules, all I’m able Shopfront onany theaspect Peninsula | Sophisticated Digital Marketing When multinational businesses move their
do is to collate relevant information for Cleaning, Linen &toChangeovers | Maintenance & Renovations | Concierge Services holiday home owners and try to present it in 24 Hour Emergency Callout | No Restrictions on Owner Bookings it may not be illegal but is it ethical? an easy to understand fashion. You should profits artificially to a low or no tax country
consult with a properly qualified person if
Let us take care of all the work so you can enjoy your holiday home and take advantage you want to investigate further. of the significant tax benefits of running it as a furnished holiday let business.
A properly run holiday home is a business
How would this work in practice?
contributing to the economy and so you should be equally business like about
The term ‘P & M’ standing for plant and
If you’re in the process of buying a holiday
claiming tax allowances. Something that
machinery is often used to describe this
home or already own one the allowance
can be missed are capital allowances
sort of allowance and this is a good way of
can be taken at 100% so a £1m house could
for plant and machinery in your holiday
thinking about it. If you buy a factory then
generate a capital allowance of £250k
home which can significantly reduce your
a proportion of the purchase price relates
which would be offset against future profit
tax burden.
to machinery, electrics, plumbing and
saving £100k for a higher rate taxpayer.
everything else that went into turning the
Retrospective claims for tax paid in the
property from an empty industrial unit into a
previous two tax years may be possible.
the kitchen, bathrooms, plumbing, electrics
income from holiday letting and not against
as a reducing balance over time.
well worth exploring.
One of the things driving the popularity of
holiday lets in recent years theE low S Ehas R been VIC D interest rate environment and the concept
only production a holiday Lworking ETS F R Ocentre. M For RU M SletE Y Losses O F can SA Nbe D used B Aagainst N K Sfuture
The perfect solution for temporary accommodation from a weekend to 5 months any other earnings. As I’ve already said A and heating could all be categorised as ‘P minimum period rentals | Broadband and maintenance included this is a complex area requiring specialist key part of this is the approachNo of losses & M’ and either written down completely advicefurnished but there’s no doubt that it may be incurred in renovating the property or and under annual investment allowance rules or | Fully Regular cleaning linen change services available and equipped of ‘My holiday home is my pension’.
running with a large mortgage in early years
Rumsey of Sandbanks will tailor the experience to suit your exact needs so you can get on with the rest of your life and we can turn an awkward stop gap into a great and memorable experience.
being carried forward to use against profits at a later date.
What proportion of a property is allowable?
www.rumseyofsandbanks.co.uk There isn’t a hard and fast rule, in theory it is the proportion of cost of the original build 01202 707357 that relates to the capital items which will office@rumseyofsandbanks.co.uk clearly vary. In a luxury villa with swimming
pool and air conditioning in a country where Rumseys A4 A4 NOV 2019.indd 1
land is cheap, plant & machinery could
Simon Tolson owns Rumsey of Sandbanks,
easily be more than 50% of the value but
a holiday letting agency. Contact Simon on
for a typical Sandbanks home something
01202 707357.
in the 20% - 30% range is probably
simon@rumseyofsandbanks.co.uk
22/11/2019 13:03
realistic and unlikely to be challenged by www.rumseyofsandbanks.co.uk
the Revenue.
29
H O U S E- M AG .C O.U K
