TaxPersonal TaxSmith & Williamson raise inheritance tax red flag on holiday lets

Smith & Williamson raise inheritance tax red flag on holiday lets

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 lets
get caught in the inheritance tax net, calling for the government to consult on
the issue.

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

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

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

“It would be helpful if the announced consultation also dealt with this issue
so that the treatment of holiday lets is consistent throughout the taxes,” said
Helen Demuth, tax director at the firm.

“There is therefore a further window of opportunity to review your furnished
holiday let properties and consider improvements or disposal, particularly if
your properties only just qualify under the existing rules,” Demuth added.

Further reading:

Holiday
home VAT exemption boost for private builders

Election
hopefuls clash over tax

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