Piggybank News

March 13, 2012

Change in Tax Rules for Holiday Lets

In a recent case, the tax tribunal dismissed HMRC‘s argument that furnished holiday lets should be categorised with other buy-to-let and rental properties, which attract 40% inheritance tax on the owner’s death.  Instead they ruled that it should be deemed a business. This means that owners of holiday homes who let them out will be able to claim business property relief and reduce their Inheritance Tax bills.

Stephen Barratt, private client director at accountants James Cowper, said  “While HMRC can be expected to take their arguments to the Upper Tier Tribunal, as it stands the decision is good news and could open the door to a flood of claimants who have been awaiting the verdict. It could also give people greater certainty in planning their affairs.”

This ruling is in contrast to the case for to buy-to-let properties which are not treated as businesses for tax purposes.

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