Accountancy Age, Accountancy Age, Wednesday 23 June 2010 at 10:11:00

Treatment of holiday lets should be consistent across the tax spectrum,including inheritance tax Smith & Williamson experts say


Smith & Williamson has warned holiday property owners that furnished letsget caught in the inheritance tax net, calling for the government to consult onthe issue.

The taxman no longer considers holiday lets as qualifying for businessproperty relief, in respect of inheritance tax, unless very significantadditional services are provided, experts at the firm warned.

Taxpayers can claim business property relief for 2010/2011 and 2012/2013through an annual investment allowance of 100,000, but the Labour governmenthad planned to reduce this to 25,000 from 2012/13.

The government has now opened up a consultation on the issue, but the IHTrules are out of kilter with the rest of tax framework.

"It would be helpful if the announced consultation also dealt with this issueso that the treatment of holiday lets is consistent throughout the taxes," saidHelen Demuth, tax director at the firm.

"There is therefore a further window of opportunity to review your furnishedholiday let properties and consider improvements or disposal, particularly ifyour properties only just qualify under the existing rules," Demuth added.

Further reading:

Holidayhome VAT exemption boost for private builders

Electionhopefuls clash over tax