Furnished Holiday Lets (FHLs) - does your property qualify?

Criteria for property to qualify as an FHL

The property must be:

1. Furnished;
2. Situated in the UK or EEA;
3. Available to let commercially as holiday accommodation for at least 210 days in the tax year; and
4. Actually let as furnished holiday accommodation for at least 105 of those days. 
   1. Any period of longer-term occupation (defined as 31 days or more) does not count towards the number of days let.
   2. If this total period of longer-term occupation exceeds 155 days, the property is automatically disqualified from being an FHL.

Elections

If it becomes difficult to meet these conditions (which many landlords found during COVID-19 when there was a slump in hospitality), there are two elections available to help retain FHL status.

Averaging Election

The averaging election is available for landlords who let more than one property as an FHL, where one or more such properties does not meet the letting condition of 105 days. The election allows you to take the average number of let days and apply it to all of your holiday lets, so that they potentially all meet the letting condition. 

Period of Grace Election

If you’ve failed to let your property for the required 105 days, you can make a Period of Grace election to treat your property as though it was let for this period. To do so, your property must have qualified as an FHL in the previous year and you must have had a genuine intention to meet the 105-day requirement in the current year. For example, you could prove this by showing you’ve marketed the property to the same or a greater level than in successful years. This election can be renewed for a second year, but the initial election must be made in the first year of failing to meet the letting condition. 

For example, if the property qualified as an FHL in 2020/21 but didn’t meet the letting condition for 2021/22, you must make a valid election for 2021/22 before making one for 2022/23.  

Deadlines for making an election for 2021/22

Both the Period of Grace and Averaging elections must be made on or before the first anniversary of the normal Self-Assessment filing date of the tax year concerned. For the 2021/22 tax year, this deadline is 31 January 2024 and is therefore still available but fast-approaching.

What should you do?

If you’re concerned about whether your rental property will meet the FHL conditions, then don’t panic! It’s not too late to make saving grace elections for as far back as 2021/22. You should ensure to keep accurate records of your property's rental history.

To speak to one of our trusted advisers and understand how you could benefit from these elections for your FHL, please fill in the form below and we will be in touch to discuss your requirements and how we can help.