Good news for holiday home owners! In these days of punitive stamp duty for buy to let owners and changes to mortgage requirements for those looking to invest in property, there is a tax benefit for holiday home owners that many are unaware of and few have taken advantage of.
If you own a holiday home or even a number of them and you pay tax on the income from those holiday homes in the UK then you could be missing out on a tax allowance that is enshrined in tax statute and yours by right – you just need to know how to quantify it. Providing your holiday home(s) is available to be let for at least 210 days per year and is actually let for at least 105 days per year then you could have a strong claim for Embedded Capital Allowances. As the name suggests these are items embedded in the property and forming part of its overall value when you bought it but that are able to be moved if necessary. It covers things such as radiators, heating systems, air conditioning, bathroom and toilet fittings, kitchens, security systems and much more.
Typically we would expect to find around 25% of the original purchase value of the property would be identified as allowable items which represents £125K of allowances in a £500K property which translates as £50K in tax refund and/or reduction in future tax liability to a higher rate tax payer. So it’s an exercise well worth doing.
You may ask “wont my accountant have already done this?” – the answer is almost certainly not. It’s a highly specialised area of tax statute and requires very specific knowledge of that area as well as a specialist team that includes a quantity surveyor, chartered surveyor and a chartered tax specialist. Very few general practice accountants have a team such as this and the job can’t be done properly without them.
We have the specialist team required working with us as part of our in house team and on a daily basis we are identifying allowances for our clients that are making significant differences to their tax liabilities both now and over the next few years. In most cases that includes a significant cash inflow immediately.
Best of all, it costs you nothing to find out. We can do a full review of your property on a totally contingent basis. In other words we only charge a fee if we successfully identify unclaimed allowances and those are accepted by HMRC – our fee is 100% linked to a successful outcome. There is no upfront charge and you only pay once the benefit is confirmed. There is literally no risk to you.