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Period Of Grace Elections For Furnished Holiday Lettings

HMRC now includes unforeseen circumstances ...


Posted by Helen Beaumont on 22/06/2022 @ 8:00AM

When a property qualifies as a Furnished Holiday Letting (FHL), they become subject to special tax rules. Should it not qualify, it is simply a furnished property and subject to different tax treatment ...

Period of grace elections for FHLs now include unforeseen circumstances!

Period of grace elections for FHLs now include unforeseen circumstances!

copyright: jamesteohart / 123rf

If a property qualifies, then it must be:

  • Available to be commercially let for 210 days in a year

  • Physically let commercially for a minimum of 105 days

  • Not let on long term occupation, more than 31 consecutive days, for more than 155 days in a year

In general, an FHL is treated individually, but for landlords with multiple properties, it is possible to average across them. This means a successful, fully booked let can compensate for less successful ones.

However, it's worth noting a number of updates to the FHL tax rules for 2020/21, including the period of grace election qualifying period in the face of unforeseen circumstances.

The period of grace election applies when a landlord has been unable to let the FHL for the required number of days. They must be able to show a genuine intention to let the property, so evidence of income from previous years and proof of current marketing will always help here.

Of course, the pandemic has made it very difficult to meet these conditions for Furnished Holiday Lets during the lockdown, so now HMRC has confirmed that for the 2020/21 tax year, this unforeseen circumstance can be the trigger for a period of grace election.

"This will bring a lot of relief to landlords!

Remember though, if an FHL does not reach the thresholds for four consecutive years, then after two consecutive periods of grace election, it is no longer eligible to be classed as a Furnished Holiday Let.

Until next time ...



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About Helen Beaumont ...


Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.

Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.

When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.