Chapter PIM7200

Published date10 April 2016
Record NumberPIM7200
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

ITTOIA/S323-326

Qualifying Tests for IT taxpayers from tax years 2005-06 to 2010-11

Summary

To qualify as a FHL a property must:

  • be let on a commercial basis with a view to realisation of profits
  • be furnished - there must be sufficient furniture provided for normal occupation and your visitors must be entitled to use the furniture
  • pass the 3 occupancy conditions

Occupancy conditions

Accommodation can only qualify as a FHL if it passes all 3 occupancy conditions:

  • Pattern of occupation condition
  • Availability condition
  • Letting condition

The pattern of occupation condition

The total of all lettings that exceed 31 continuous days must not exceed 155 days during the year.

The availability condition

The property must be available for letting as furnished holiday accommodation letting for at least 140 days in the year.

Don’t count any days when the customer is staying in the property.

The letting condition

The property must be let commercially as furnished holiday accommodation to the public for at least 70 days in the year.

Don’t count any days when the property is let to friends or relatives at zero or reduced rates as this isn’t a commercial let.

Don’t count longer-term lets of more than 31 days, unless the 31 days is exceeded because something unforeseen happens. For example, if the holidaymaker either:

  • falls ill or has an accident, and can’t leave on time
  • has to extend their holiday due to a delayed flight

If the property isn’t let for at least 70 days an averaging election may be made if the customer has more than one property. The details how this works is set out below

Period to which the occupancy conditions are applied - for IT cases

For a continuing let, apply the tests to the tax year - that’s from 6 April one year to the 5 April the next.

For a new let, apply the tests to the first 12 months from when the letting began.

When the letting stops, apply the tests to the 12 months up to when the letting finished.

Examples

1) A property has been let furnished on a commercial basis since 2006. For 2008-09 the tests are applied to the year of assessment 2008-09 itself.

2) A property is acquired on 1 January 2009 and is let furnished on a commercial basis from 1 March 2009. To determine whether the letting qualifies for 2008-09 tax year the tests are applied to the twelve months from 1 March 2009 (1 March 2009 to 28 February 2010). For 2009-10 the tests are applied to the year of assessment itself.

3) A property has been let as furnished...

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