Income from furnished holiday lettings will not be reclassified. It will continue to be assessed as property income, but after the repeal of the furnished holiday lettings rules it will no longer be treated as trade income for certain tax purposes.
Treasury Ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. As was the case with previous Administrations, it is not the Government’s practice to provide details of all such meetings.
Tax policy changes and related measures are considered through the Budget process in the usual way and in the light of prevailing economic and other circumstances. The Government announced the withdrawal of the furnished holiday lettings scheme from 2010 in Budget 2009 and will be publishing draft legislation for comment alongside the pre-Budget report. An impact assessment will also be published at this time.
After the repeal of the furnished holiday lettings rules, loss relief will be available to those letting furnished holiday accommodation under the property income rules.
In general, individuals may set their losses against other property income they have in the year, or against the future profits of their letting business.
In general, companies will set their losses against income from other sources in the year or future years.
The announcement to withdraw the FHL rules was made at Budget 2009 in order to provide a period of notice to those affected, and thus allow them time to plan for the change in tax treatment.
We intend to publish draft legislation and an impact assessment at the 2009 pre-Budget report, and we will be happy to receive comments at that time. The legislation will be in a future Finance Bill.