Exploring Capital Gains Tax on Furnished Holiday Lets & The Benefits of Business Asset Disposal Relief

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Capital Gains Tax and Holiday Lets: An Overview

Holiday homes can be fantastic investments, offering a place to escape while potentially earning you an income. However, like any property investment, they come with tax implications. In particular, you’ll need to understand Capital Gains Tax (CGT) if you decide to sell your furnished holiday let.

When you sell a property that’s not your main home, any profit you make above your tax-free allowance (known as your Annual Exempt Amount) is typically subject to CGT. The rates can be 18% or 28%, depending on your overall taxable income. (The taxation principles are different for a Limited Company.

The Silver Lining: Furnished Holiday Lets and CGT

Here’s some good news. Furnished holiday lets are considered a form of business for tax purposes, which means they can be eligible for certain reliefs not available to other types of property, potentially reducing your CGT liability. This brings us neatly onto Business Asset Disposal Relief.

Decoding Business Asset Disposal Relief

Formerly known as Entrepreneurs’ Relief, Business Asset Disposal Relief (BADR) can be a big money-saver if you’re selling a business, which includes your furnished holiday let if it meets certain conditions.

If you qualify for BADR, you’ll only pay a reduced CGT rate of 10% on gains from the sale, up to a lifetime limit of £1 million. That’s a significant reduction from the usual CGT rates!

Qualifying for BADR

Qualifying for BADR requires meeting a few conditions in the two years leading up to the sale:

Your holiday let must be a trading business. – This means it’s available to let for at least 210 days a year and actually let for 105 days. Be aware that days you or your family stay there don’t count towards these totals.

You must be an owner of the business. – You must have owned the holiday let for at least two years before you sell it.

Remember, tax laws can be complex and everyone’s circumstances are unique. So, it’s always a good idea to get professional advice to understand your specific tax liabilities and potential reliefs.

## We’re Here for You

Understanding the ins and outs of CGT and BADR might seem complicated, but don’t worry, we’re here to help. Our team of friendly tax experts can provide advice tailored to your specific circumstances, helping you navigate the tax landscape and possibly save you some money.

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What our customers say

Celia Prause
2. April, 2024
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28. March, 2024
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21. March, 2024
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Andy Bacon
5. March, 2024
Having sold a UK residential property I had owned for 18 years I was facing a potentially significant CGT liability. Although the HMRC calculator appeared pretty straightforward I decided to approach an expert and fortunately found James just in time. I found his willingness to provide no obligation up-front advice over the phone very welcome and decided to appoint Tax Bees for peace of mind with the added bonus that his very reasonable fee might be saved when he got into the detail of my case. I certainly pays to spend some time putting together all the facts; as a result it proved very fruitful to invest in James when he significantly reduced my expected liability by many thousands compared to the HMRC online calculator. Lesson learnt - its never as simple as it first appears and not all the rules are entirely transparent!
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21. February, 2024
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CLIVE WALLIS
14. February, 2024
I asked Tax bees at short notice to help out with my CGT submission, i found the team to be very efficient and very approachable . The fee was fixed .. so no nasty surprises at the end, and i believe the tax saving and peace of mind knowing that a professional had been involved is very reassuring. Thanks to James and Jayne.
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2. February, 2024
Thanks so much for everything and for completing our return on time. You've been so easy to work with and have done an excellent job. I found Tax Bees online and was nervous about using a service without a personal recommendation. However, I would highly recommend Tax Bees to anyone looking for help with their Capital Gains Tax, particularly James Dean, who has been exceptionally helpful and efficient from the first email enquiry and has achieved a great outcome.
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28. January, 2024
Fantastic service very efficient attention to detail Friendly and very knowledgeable
Kate Jones
24. January, 2024
I popped into Tax Bees on the off chance that I might be able to get some help with my Self Assessment Tax Return. I drive past the building everyday and often wondered whether they would be able to help advise me. James and Jayne were so friendly and welcoming and after a nice chat and a coffee they reassured me that they could help straight away - even during the month of January which is a very busy month for them. I would certainly recommend Tax Bee's if you have any Tax needs or concerns for your business or if like me you just need help and guidance on that dreaded self assessment. James also looked into my last four years of pension tax relief and managed to get me a rebate. Very happy customer. Thanks again James and Jayne!
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22. January, 2024
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