Finance Act 1984

Section 50(1).

SCHEDULE 11FURNISHED HOLIDAY LETTINGS

Treatment of lettings as a trade for certain purposes

1(1)Subject to the provisions of this Schedule, for the purposes of the provisions mentioned in sub-paragraph (2) below—

(a)the commercial letting of furnished holiday accommodation in respect of which the profits or gains are chargeable under Case VI of Schedule D shall be treated as a trade; and

(b)all such lettings made by a particular person or partnership or body of persons shall be treated as one trade.

(2)The provisions mentioned in sub-paragraph (1) above are—

(a)section 4(2) of the Taxes Act (payment of income tax in two equal instalments);

(b)sections 168 to 175 and 177 to 178 of the Taxes Act and section 30 of the [1978 c. 42.] Finance Act 1978 (relief for losses) ;

(c)subsection (9)(c) of section 226 of the Taxes Act (retirement annuity contracts);

(d)subsection (1)(c) of section 530 of that Act (earned income) ;

(e)Chapter I of Part III of the [1971 c. 68.] Finance Act 1971 (capital allowances) ;

(f)sections 115 to 120 of the [1979 c. 14.] Capital Gains Tax Act 1979 (roll over relief for replacement of business assets) ;

(g)section 124 of that Act (transfer of business on retirement) ;

(h)section 126 of that Act (relief for gifts of business assets);

(i)section 136 of that Act (relief in respect of loans to traders) ; and

(j)section 39 of the [1980 c. 48.] Finance Act 1980 (relief for pre-trading expenditure).

Losses and pre-trading expenditure

2(1)In their application by virtue of paragraph 1 above section 175(1) of the Taxes Act (treatment of interest as a loss for purposes of carry-forward and carry-back) and section 39(1) of the Finance Act 1980 shall have effect as if for the references in those sections to Case I of Schedule D there were substituted references to Case VI of that Schedule.

(2)No relief shall be given to an individual under section 30 of the [1978 c. 42.] Finance Act 1978, as it applies by virtue of paragraph 1 above, in respect of a loss sustained in any year of assessment, if any of the accommodation in respect of which the trade is carried on in that year was first let by him as furnished accommodation more than three years before the beginning of that year of assessment.

(3)Relief shall not be given for the same loss or the same portion of a loss both under any of the provisions mentioned in paragraph 1(2)(b) above, as they apply by virtue of this Schedule, and under any other provision of the Tax Acts.

Expenditure

3In computing the profits or gains arising from the commercial letting of furnished holiday accommodation which are chargeable to tax under Case VI of Schedule D, such expenditure may be deducted as would be deductible if the letting were a trade and those profits or gains were accordingly to be computed in accordance with the rules applicable to Case I of that Schedule.

Capital gains tax

4(1)Subject to sub-paragraph (2) below, for the purposes of the provisions mentioned in sub-paragraph (2)(f) to (i) of paragraph 1 above as they apply by virtue of that paragraph, where in any year of assessment a person makes a commercial letting of furnished holiday accommodation—

(a)the accommodation shall be taken to be used in that year only for the purposes of the trade of making such lettings ; and

(b)that trade shall be taken to be carried on throughout that year.

(2)Sub-paragraph (1) above does not apply to any period in a year of assessment during which the accommodation is neither let commercially nor available to be so let unless it is prevented from being so let or available by any works of construction or repair.

5Where—

(a)a gain to which section 101 of the [1979 c. 14.] Capital Gains Tax Act 1979 (relief on disposal of private residence) applies accrues to any individual on the disposal of an asset; and

(b)by virtue of paragraph 1 above the amount or value of the consideration for the acquisition of the asset is treated as reduced under section 115 or 116 of that Act,

the gain to which section 101 applies shall be reduced by the amount of the reduction mentioned in paragraph (b) above.

Power to make apportionments

6Where there is a letting of accommodation only part of which is holiday accommodation such apportionments shall be made for the purposes of this Schedule as appear to the inspector, or on appeal the Commissioners, to be just and reasonable.

Adjustments of tax charged

7Where a person has been charged to income tax, corporation tax or capital gains tax otherwise than in accordance with the provisions of this Schedule, such assessment, reduction or discharge of an assessment or, where a claim for repayment is made, such repayment, shall be made as may be necessary to give effect to those provisions.