View the article online at http://citywire.co.uk/money/article/a571198
Holiday let owners in inheritance tax court victory
Holiday home owners who rent their property have won a victory over the taxman in a dispute over business tax relief.
A landmark court case will allow holiday home-owners who let their properties to claim business property relief and reduce their inheritance tax (IHT) bill.
However, a tax tribunal dismissed the taxman’s argument that furnished holiday lets should not be considered a business for IHT purposes, and that relief should only be given when the owner had substantial involvement with the holidaymakers.
HMRC argued that ‘an intelligent businessman would not consider them [holiday lets] to be investments’.
Following the ruling, holiday lets will now be able to claim business property relief, which in turn provides relief from IHT on the transfer of relevant business assets on death.
Although the ruling concerned a UK property, it could have implications for those who let properties overseas.
Stephen Barratt, private client director at accountants James Cowper, said the ruling was particularly interesting as there was no clear evidence that the owner had substantial involvement with the holidaymakers – part of HMRC’s rules for deciding on the relief.
‘While HMRC can be expected to take their arguments to the Upper Tier Tribunal, as it stands, however, the decision is good news and could open the door to a flood of claimants who have been awaiting the verdict. It could also give people greater certainty in planning their affairs,’ said Barratt.
He added that those who have overseas properties could find they can make claims and urged those with holiday lets to maintain proper records to allow them to claim the relief at a later date.
News sponsored by:
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
More about this:
More from us
- France axes plans to tax holiday home Brits
- The 10 top places to buy property abroad
- Treasury turns screw on holiday home owners
- Inheritance tax (IHT) – your key questions answered
- Inheritance tax explained: Property
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add email@example.com to your safe senders list so we don't get junked.
by Gavin Lumsden on Sep 01, 2016 at 00:01