Significant Benefits of Owning Holiday Accommodation

Homes classified as Furnished Holiday Accommodation have a number of benefits over long term rentals.

Rental incomes are very good e.g. a high quality three bedroom property in a prime location can fetch £1,500 per week in high season.

Tax benefits of Furnished Holiday Accommodation include:

- Capital Gains Tax on any sale charged at a flat rate of 18% and should qualify for entrepreneur relief giving a rate of only 10% on the first £1m of lifetime gains.

- Any losses, such as in early years if you have large furnishing costs, can be offset against other income to reduce income tax overall (subject to conditions).

- If occupied by you for a period, further relief can be obtained through strategically designating the property as primary residence during ownership.

- The property can be used to reduce Inheritance Tax, dependent on the level of services offered.

- General running expenses, including mortgage interest and agency fees, can be claimed for as expenses against pre-tax earnings.

- Capital allowances can be claimed on the costs of furnishings and fittings.

- Landlords are only required to register for VAT where gross income exceeds £64,000 (2007/2008 threshold, subject to other business income).


Ability to frequently access property allows monitoring to reduce wear and tear versus long term rentals.

There are no sale restrictions because of long term tenancy agreements.

As opposed to a long term rental property, you can use the property for your own breaks.