We have received an enquiry for long term rental of 3 months for our Furnished Holiday Let (FHL), over our quiet period this coming winter and it appears quite tempting to take it.
We have been running this FHL over the last 5 years and have complied with the occupancy rules each year and fully qualify. My concerns are relating how we can safely accept this booking while still maintaining the FHL status?
We would still able comply with HS253 rules by only counting 31 days towards the minimum 105 days and still have sufficient other stays to exceed 105 days. Also the total of all lettings that exceed 31 continuous days is not going to be more than more than 155 days. So it would appear the rental would be allowed and we would still maintain FHL tax benefits.
My major concern is with regards to us unwittingly granting creating an AST by allowing this. I found this article: https://thenegotiator.co.uk/holiday-lets-and-the-law/
Any suggestions or advice would be greatly appreciated.
HS253 Furnished holiday lettings (2018) >> .Gov Click Here
2. Occupancy conditions
Accommodation can only qualify as a FHL if it passes all 3 occupancy conditions.
2.1 How to use the occupancy conditions
For a continuing let, apply the tests to the tax year – that’s from 6 April one year to the 5 April the next.
For a new let, apply the tests to the first 12 months from when the letting began.
When your letting stops, apply the tests to the 12 months up to when the letting finished.
2.2 The pattern of occupation condition
If the total of all lettings that exceed 31 continuous days is more than 155 days during the year, this condition isn’t met so your property won’t be a FHL for that year.
2.3 The availability condition
Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year (140 days for the tax year 2011 to 2012 and earlier).
Don’t count any days when you’re staying in the property. HM Revenue and Customs (HMRC) don’t consider the property to be available for letting while you’re staying there.
2.4 The letting condition
You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year (70 days for the tax year 2011 to 2012 and earlier).
Don’t count any days when you let the property to friends or relatives at zero or reduced rates as this isn’t a commercial let.
Don’t count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens. For example, if the holidaymaker either:
- falls ill or has an accident, and can’t leave on time
- has to extend their holiday due to a delayed flight
If you don’t let your property for at least 105 days, you have 2 options (known as elections) that can help you reach the occupancy threshold:
- the averaging election – if you’ve more than one property
- a period of grace election – if your property reaches the occupancy threshold in some years but not in others
3. Averaging election
If you let more than one property as a FHL, and one or more of these properties doesn’t meet the letting condition of 105 days, you can elect to apply the letting condition to the average rate of occupancy for all the properties you let as FHLs. This is called an averaging election.