UK TAX - changes to mortgage interest as a claimable expense?

[Sean1062]

Hi all

I've been informed that in the UK you can only reclaim 25% of the mortgage interest as an expense on short term holiday lets. I find this hard to believe, but my source is knowledgeable is this area. I cant find anything to support this in fact quite the opposite.

https://hoa.org.uk/advice/guides-for-homeowners/i-am-buying/holiday-let-mortgage/

 "The big attraction of a holiday let mortgage is the way the taxman views it. As a furnished holiday let is classed as a business you can deduct all your expenses from your rental income before you are assessed for tax. That includes the interest you are paying on your mortgage."

Can anyone verify if there has been changes made to the way short term holidays lets are taxed

RGS Sean

[Mike-And-Jane0]

@Sean1062 There are 'Lets' and 'Furnished Holiday Lets' The latter has different tax rules one of which is that you can claim mortgage tax relief as you used to be able to on all rentals. To qualify to a a FHL you have to have the property available to rent for 210 nights and actually rent for at least 105 (numbers may be slightly wrong). I also believe you can allocate the rental to one or both of the owners so can maximise the use of a partners tax allowance.

Finally as its a business you should be charged business rates which with small business rates relief are often lower than council tax. 

[Mike-And-Jane0]

@Sean1062 And now to answer your question: 

There have NOT been any changes to the way furnished holiday lets are taxed but there have been changes to the way rental properties are taxed. It is quite bizarre how the government changes some rules but not others.

[Sean1062]

@Mike-And-Jane0 

Thanx for the feed back.

I really appreciate your help.