Responses to our "Tax Blow for Holiday Homes" article

We recently ran an article regarding changes to the law which currently allows some tax breaks for holiday home operators. Click here to read the full article.

Below are a some of the responses we received

Simon from Buckinghamshire writes

Interesting article John - do you know what the definition is of the phrase "landlords will no longer be able to write off "trading" losses from second homes against their tax bill" Is it

1. Landlords can no longer offset the cost of a mortgage as one of the costs deducted from rental revenue from a property they rent out; or
2. Having offset the mortgage and any other costs from revenue as previously to arrive at the annual 'rental profit', if this turns out to be a loss in the year they can no longer offset this against their tax bill

Our answer

Hi Simon

I don’t know about mortgage repayments, but my understanding is that from next April there will be no way of claiming running expenses, laundry, advertising, cleaning, brochures, office, phone or anything. Your businesses will be classed as equal to those of landlords letting permanent accommodation with only depreciation being allowed as off-setting costs. Your accountant is really the one to advise you

Tim & Cathy from Pembrokeshire state

Thank you for the information regarding the proposed changes to the FHL rules. Although it is excellent that you are trying to draw people's attention to this PLEASE AVOID THE TERM SECOND HOME This give out the wrong message as "second home" has political implications. We are letting HOLIDAY HOMES as a business and it is our business which is at risk along with many thousands of others large and small. Also the term TAX BREAK implies the rules are concerned with capital gains etc whereas the big issue is that all self catering businesses will be non- businesses from next year. Meaning there will be no way of claiming running expenses, laundry, advertising, cleaning, brochures, office, phone or anything. Our businesses will be classed as equal to those of landlords letting permanent accommodation with only depreciation being allowed as off-setting costs.
With regards,
Tim & Cathy

Johanne of Argyle asks

Hi John,
Is this relevant to us as we are running a holiday letting business not just owning a second home?
Regards,
Johanne

Our answer

Hello Johanne

My understanding is that from next April there will be no way of claiming running expenses, laundry, advertising, cleaning, brochures, office, phone or anything. Your businesses will be classed as equal to those of landlords letting permanent accommodation with only depreciation being allowed as off-setting costs. Although your accountant is really the one to advise you.

Neil of Sutherland contacts us

Hello John,

Although I can, to a very slight degree, understand the logic for 2nd homes, where the owner uses the property for his own use some of the time, it doesn't make sense for holiday complexes and units that are never used by the owners. If the same rule was to apply for car hire firms where would this leave Hertz and Avis?!!!!!

I have already written to my MP for all it's worth!

Regards,
Neil

An unsigned response from Yorkshire

I've just read your "Tax Blow on Holiday Cottages" article and found the anti-European, "blame Brussels", "Eurocrats" tone quite offensive. The tax changes on holiday homes need reversing but are merely an unintended consequence of a badly handled Government introduced proposal.

Many of us are increasingly pro-European (even on the centre right of British politics), as we realise that we need to work with our neighbours and not just resort to constant criticism and gutter humour. May I suggest you leave it to the likes of The Sun and Daily Mirror to speculate on "straightening bananas" and "banishing British sausages". It has nothing to do with this situation and doesn't help us reach a solution.

We thank you for the comments we have already received and we ask that anybody with further feedback to e-mail us