For owners of furnished holiday lets (FHLs), especially those in seasonal destinations, the lure to shift to longer residential lets during quieter months is common. This strategy could indeed ensure continuous income throughout the year, but it’s not without potential tax repercussions that could affect the lucrative benefits FHLs enjoy.

To tap into the favourable tax treatments of FHLs, such as access to capital gains tax business reliefs and full interest deduction, your property must satisfy certain conditions. These include restrictions on the length of individual lets, minimum availability, and actual letting periods within the tax year.

Specifically, the pattern of occupation condition caps longer lets at 155 days annually, and exceeding this can disqualify your property from being recognized as an FHL. Therefore, even in the off-season, any residential lets should be carefully timed to avoid surpassing this threshold.

While preserving FHL status may seem critical for tax advantages, practical business decisions shouldn’t be overlooked. If letting the property residentially during slower periods is more viable than leaving it vacant, this could outweigh the tax perks. After all, consistent rental income might compensate for the loss of FHL-specific tax benefits.

 
 
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