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  • RE: Furnished holiday let - treatment of expenditure prior to FHL status

    Hi there I appreciate HMRC is really busy at this time of year but please can anyone offer me some help on this query? Thank you for any help that anyone can give
  • RE: Furnished holiday let - treatment of expenditure prior to FHL status

    Hi Thank you for responding and for the link to PIM4140 which I had not seen before. Having read this, unless I'm missing something, I'm still not clear about the correct treatment: PIM 4140 states that: "FHL businesses are entitled to capital allowances on the furniture, white goods, etc. within the property but non-FHL businesses do not qualify for these capital allowances." But HS252 says that: "Capital allowances are available from the date your business starts trading. You can also claim capital allowances for items bought before you started trading, if they were necessary for the business to run." It essentially took a year (21/22) for the repair and refurbishment to take place, and this cost (prior to the initial letting) is legitimate business expenditure but the property achieved FHL status in 22/23 in its first year of letting. Hence my lack of clarity about when capital allowances can be claimed - ie is it from when the 'business started' in April 2022 or should this spend be deferred until 22/23 when the property achieved FHL status? Hope this makes sense and thank you for your help and guidance
  • Furnished holiday let - treatment of expenditure prior to FHL status

    Hi, HMRC admin Having looked at the relevant information/support pages, I haven't been able to find an answer to my specific query so would would be very grateful for some advice on the following issue: I have a long held property which until March 2021 was let on an unfurnished long term basis. After the last tenancy finished. I decided to change the letting basis to a furnished holiday let (I noted this intention in the 20/21 tax return). A programme of repair, maintenance and refurbishment started in April 2021 though it took much longer than planned due to a variety of issues including covid and building supply shortages and was not completed until April 2022. My question is when should the qualifying expenditure incurred in the 21/22 tax year be included in a tax return? It was incurred in 21/22 but the property was not available to let until May 2022 and has subsequently achieved the letting requirements for FHL status in 2022/23. So essentially, what should be included in 21/22 and 22/23 and is there a distinction between the treatment of general qualifying expenditure (eg say insurance, heat light etc) and the treatment of expenditure qualifying for capital allowances? So for example, in the context of capital allowances, I consider the holiday let 'business' (such as it is - it is only 1 property) to have started in April 2021 and understand that capital allowances are available from the date a business starts trading. But I'm also aware that FHL status is required to claim CAs - so would I enter the CA qualifying expenditure in my 2021/22 tax return before the property qualified as a FHL? - or should it be entered in 22/23 when the property meets the FHL requirements? I would appreciate any help and guidance to help me to understand and treat this correctly in the tax return. Many thanks