Owning Furnished Holiday Lets (FHL’S) has always brought with it some confusion over tax status.
With FHL’s you are not self-employed as you declare the income on the property pages of your tax return, but you benefit from relief at full on interest as you are treated as a business. You may qualify for Business Property Relief (BPR) on death as it is treated like a business; but not all the time, and there is never a guarantee that HMRC would accept a BPR claim.
Now though, we are in the eye of the COVID19 storm and looking for some guidance from the Government.
Owners must there consider carefully their own position and look at what support is available.
At the moment there are a host of support measures in place:
- Finance through the Coronavirus Business Interruption Loan Scheme
- Tax payment deferral for the self-employed
- The Coronavirus Job Retention Scheme
- Business rates holiday
- Grant support connected to business rates status
- The Self-Employed Income Support Scheme Taxable Grant
We have provided links on our webpage to the Government website providing as much details as is available.
How does this impact on your business, firstly let us look at what has been put in place:
If you are VAT registered there is an automatic deferral in place from 20th March up to 30th June, this has been deferred to the end of the tax year ended 5 April 2021.
If you have employees you can use the Self Employed Furlough Scheme which will allow up to 80% of the staff salary to be covered for a period up to the end of May, this may be extended, please ask before you do anything in this regard as there are procedures to be followed.
Business interruption loan scheme may be an option, but it is still only a loan, and care should be taken and options considered before taking out this type of loan.
If you are not working, then consider Universal Credit (UC), we have included links in previous newsletters to both the government site and UC calculators.
Business rates and Grant support are also considered and again we have mentioned this in previous Newsletters, however here is a link to the Scottish Government website with more up to date detail.
We are also keeping a close eye on how the Self-Employed grant scheme is being rolled out, at the moment this is relevant to those who are self-employed and therefore by virtue of the fact that they complete the self-assessment pages of a tax return and not the property pages. We will continue to monitor this.
We will also need to keep a close eye on the days the property is let, we will hopefully see some relaxation on the rules, but again will report as soon as we are aware.
Other things to mention
There is still no further updates in the new grant form for Self Catering Non Domestic Rates Relief
We still await the process for the furlough employees and HMRC have still to release details but will not be available till end of January
We will have a comprehensive PDF available which will summarise most point of available support shortly.
We await support for directors of limited companies who are run on their own and what might be made available to support us.