Review of Furnished Holiday Let Rules

The Office of Tax Simplification (OTS) has undertaken a review of Property Taxation. As part of that, they have reviewed Furnished Holiday Let (FHL) Rules. 

In association with the Professional Association of Self-Caterers (PASC UK), the ASSC, submitted a response to their call for evidence. Download this here: ASSC PASC UK Submission to the Office of Tax Simplification Call for Evidence on Property Income Tax.

The OTS published a review and recommendations in November 2022: OTS_Property_Income_review.

The ASSC and PASC have commissioned PFK Francis Clark Chartered Accountants to write a report on the OTS Review. It will be written by John Endecott, who is Partner and Head of Tax at the firm.

We believe that there is a reasonable likelihood that the OTS review will at least be implemented in part, hence commissioning this report.

There will a report prepared for Members, covering both FHL’s and larger business, and there will be two ASSC / PASC Members meetings with John Endecott presenting the changes and possible mitigation: one for FHL’s and one for larger Businesses.

This is the proposed structure of the papers:

It will cover variations for England, Scotland and Wales

1. About the OTS report including:
   1. What is the OTS?
   2. Why has the report been produced?
   3. What status does it have?
   4. What is likely to happen next?
   5. Why should you be interested in it?
   6. Explain previous proposal to abolish the furnished holiday letting (FHL) rules

1. Recommendations made in the report in respect of the FHL rules (maybe reproduce the relevant parts of the report in an appendix, and detail the relevant parts of the FHL legislation in an appendix but that may bulk it up for little benefit).

1. Implications for capital expenditure on properties
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for the purchase of a FHL
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for profit sharing
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for the sale of a FHL
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for the death of an owner
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for lifetime gifts of properties
   1. What the current rules are
   2. What the OTS is proposing
   3. What would be the impact on owners (specifically consider a single property with personal use and a complex with 5 units+)

1. Implications for other taxes (especially VAT and business rates) and other possible implications

1. Summary table.

The link to the full review is here.

The link to FHL section 6 is here.

As soon as we have a publication date we will let you know, and at that point we will also call the Members Meetings with John Endecott.