Top tax tips for holiday home owners

This time of the year, many of us are thinking about our self-assessment tax returns which are due by the end of January. With that in mind, we have taken the opportunity to catch up with Neil Marke, Business Development Director at R.T. Marke & Co. Chartered Accountants and Business Advisors, to share some of his top tax tips for holiday home owners.

"From the HMRC television campaign you’ll probably know that you have to submit your self-assessment tax return and pay any tax due by 31st January 2018 to avoid a penalty.

But did you also know that if you are new to the holiday business, you need to register with HMRC within 3 months of receiving any gross rent?

When preparing your tax return, be as accurate as possible, as you can also be charged a penalty by HMRC if you don't take reasonable care with your tax affairs, and remember to keep all your paperwork for 7 years in case the HMRC want to ask any questions.

So if you haven't already done so you need to get those tax returns in soon, but remember to claim all your business expenses to keep the tax liability down, so typically :

• Cleaning and laundry
• Finance costs (interest only, not capital)
• Heat, light and power
• Internet and Sky
• Gardening
• Motor expenses
• Capital allowances on furniture and fixtures
• Welcome pack
• Insurances
• Repairs
• Rates (make sure you claim Small Business Rates Relief if eligible)

We find that many furnished holiday owners claim most of the smaller obvious expenses above, but miss out on the larger capital allowance items, so what are they? Capital allowances are a form of tax relief given in place of depreciation on qualifying items of plant and machinery. This extends to many fixtures and integral features in a commercial building such as the plumbing, electrics, security system and fire alarms etc.

Whilst claiming allowances on the movable items such as furniture is nothing extraordinary, many holiday letting owners are unaware they are entitled to claim a proportion of the purchase consideration of a property. This is allowed because the purchase expenditure was deemed to have been in part for the fixtures in place at the time.

Furthermore, due to the difficulties of accurately valuing systems imbedded in a property and the maze of case law in this area, allowances are often inaccurately assessed and processed even when taxpayers are aware of their right to claim. This means that many businesses are claiming only the tip of the allowance iceberg while most of the value remains hidden. We suggest owners speak to their qualified tax advisors about these potentially large claims."

About Neil Marke ACA CTA TEP

Neil Marke is a Chartered Accountant, Tax Advisor, Estate Planner and, as a Director at RT Marke & Co Ltd, he has over 30 years accountancy experience. Neil advises a large number Furnished Holiday Letting owners, to reduce their tax and improve their overall financial position.

Neil is a holiday home owner and landlord himself, so also has many years practical experience, so appreciates the hard work that is needed to succeed. If would like to speak to Neil, or seek specialist advice, you can contact R T Marke & Co Ltd by emailing [email protected], calling 01237 472 332 or visiting the RT Marke & Co Ltd website

The content of this article is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this article.

Find out more about our service here, and for more tips and information on holiday letting, visit the holidaycottages.co.uk Owner Advice Centre.