News: November 2013
IHT business property relief on furnished holiday lettings
IHT business property relief is extremely valuable, as on your death it effectively eliminates inheritance tax on the value of the property. The problem is that, following recent case law, HMRC are likely to resist any claims on the grounds that the activity of letting properties is nothing more than an investment, even where the people using your property are holiday makers.
The only hope is to ensure that plenty of additional services are provided which would not be provided if it was an ordinary property let. They could include:
- providing breakfast (likely to be sufficient to qualify on its own, but may well not be feasible)
- taking the holiday makers on trips to local attractions during their stay
- on-site help
If you own furnished holiday lets, or are considering a purchase, we can advise on the scope for obtaining BPR, where careful forward planning is essential.