Do you rent out your static caravan or lodge to holiday makers? If so, you could be entitled to a substantial tax break!
Normally, losses relating to furnished lettings are carried forward and set against future furnished lettings profits. However, in many cases, Capital Allowances may be offset against your general income of the same year. In order to be eligible, the following criteria must be met:-
- The caravan is available for letting to the public at a realistic level of commercial rent for 210 days or more;
- It is actually let in this way for at least 105 days; and
- It is let at a realistic rate that is likely to generate a profit
Nowadays, from a tax-saving point of view, the rental income you receive will normally fall under Furnished Lettings rules rather than Furnished Holiday Lettings rules.
This is because, since April 2012, losses arising from Furnished Holiday Lettings cannot generally be claimed and offset against other income to produce income tax repayments.
Under Furnished Lettings rules, losses can still be offset against general income to the extent that they relate to Capital Allowances. Losses which are not relieved in this way remain available to be carried forward for relief against future furnished lettings profits.
Allowable expenditure includes:
– Commission to agent
– Gas & Electricity
– Site rent
– Repairs to caravans
– Renewals of soft furnishings
– TV licence & TV hire
– Linen hire
– Finance charges
– Accountancy fees
– Capital allowances (most circumstances)