Corporation Tax Act 2009

Chapter 6 U.K. Commercial letting of furnished holiday accommodation

Introduction U.K.

264 Overview of Chapter U.K.

(1) This Chapter explains for the purposes of this Part what is meant by the commercial letting of furnished holiday accommodation (see sections 265 to 268).

(2) It matters whether a UK property business consists of or includes the commercial letting of furnished holiday accommodation for the purposes of—

(a) Chapter 2 of Part 10 of ICTA (loss relief: see section 503 of that Act),

(b) certain provisions of TCGA 1992 (see section 241 of that Act), and

(c) CAA 2001 (see, for example, sections 248 and 249 of that Act).

(3) This Chapter also supplements the above provisions by providing in certain circumstances for the profits of the furnished holiday lettings part of a UK property business to be calculated separately (see section 269).

Definition U.K.

265 Meaning of “commercial letting of furnished holiday accommodation” U.K.

(1) A letting is a lease or other arrangement under which a person is entitled to the use of accommodation.

(2) A letting of accommodation is commercial if the accommodation is let—

(a) on a commercial basis, and

(b) with a view to the realisation of profits.

(3) A letting is of furnished holiday accommodation if—

(a) the person entitled to the use of the accommodation is also entitled, in connection with that use, to the use of furniture, and

(b) the accommodation is qualifying holiday accommodation (see sections 267 and 268).

(4) This section applies for the purposes of this Chapter.

266 Meaning of “relevant period” in sections 267 and 268 U.K.

(1) For the purposes of sections 267 and 268 “the relevant period” for accommodation let by a company in an accounting period is determined as follows.

(2) If the accommodation was not let by the company as furnished accommodation in the 12 months immediately before the accounting period, “the relevant period” is 12 months beginning with the first day in the accounting period on which it is let by the company as furnished accommodation.

(3) If the accommodation—

(a) was let by the company as furnished accommodation in the 12 months immediately before the accounting period, but

(b) is not let by the company as furnished accommodation in the 12 months immediately after the accounting period,

“the relevant period” is 12 months ending with the last day in the accounting period on which it is let by the company as furnished accommodation.

(4) Otherwise “the relevant period” is the period of 12 months ending with the last day of the accounting period.

267 Meaning of “qualifying holiday accommodation” U.K.

(1) Accommodation which is let by a company during an accounting period is “qualifying holiday accommodation” for the accounting period if the availability, letting and pattern of occupation conditions are met.

(2) The availability condition is that, during the relevant period, the accommodation is available for commercial letting as holiday accommodation to the public generally for at least 140 days.

(3) The letting condition is that, during the relevant period, the accommodation is commercially let as holiday accommodation to members of the public for at least 70 days.

(4) For the purposes of the letting condition, a letting of accommodation for a period of longer-term occupation (see subsection (6)) is not a letting of it as holiday accommodation.

(5) The pattern of occupation condition is that, during the relevant period, not more than 155 days fall during periods of longer-term occupation.

(6) For the purposes of this section a “period of longer-term occupation” is a continuous period of more than 31 days during which the accommodation is in the same occupation otherwise than because of circumstances that are not normal.

268 Under-used holiday accommodation: averaging elections U.K.

(1) This section applies if during an accounting period a company lets both—

(a) qualifying holiday accommodation, and

(b) accommodation that would be qualifying holiday accommodation if the letting condition (see section 267(3)) were met in relation to it (“under-used accommodation”).

(2) The company may make an election for the accounting period specifying—

(a) the qualifying holiday accommodation, and

(b) any or all of the under-used accommodation.

(3) The under-used accommodation so specified is treated as qualifying holiday accommodation for the accounting period if the average of the number of let days for the accounting period of all the accommodation specified in the election is at least 70.

(4) “The number of let days” for an accounting period of any accommodation is the number of days during the relevant period for which it is commercially let by the company as holiday accommodation to members of the public.

(5) Qualifying holiday accommodation may not be specified in more than one election for an accounting period.

(6) An election for an accounting period must be made within the period of two years beginning at the end of the accounting period.

Separate profit calculations U.K.

269 Capital allowances and loss relief U.K.

(1) If a UK property business consists of both—

(a) the commercial letting of furnished holiday accommodation (“the furnished holiday lettings part”), and

(b) other businesses or transactions (“the other part”),

this section requires separate calculations to be made of the profits of the furnished holiday lettings part and the other part.

(2) The calculations must be made if—

(a) section 248 or 249 of CAA 2001 (giving effect to allowances and charges) applies to the furnished holiday lettings part or the other part, or

(b) any provision of Chapter 2 of Part 10 of ICTA (loss relief) applies in relation to a loss made in either of those parts.

(3) If there is a letting of accommodation only part of which is holiday accommodation, such apportionments are to be made for the purposes of this section as are just and reasonable.