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—

[F1 (za) section 250A (replacement domestic items relief: see subsection (7)),]

[F2 (a) Chapter 4 of Part 4 of CTA 2010 (relief for property business losses: see section 65 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).

[F3 (2A) It matters whether an overseas property business consists of or includes the commercial letting of furnished holiday accommodation in one or more EEA states for the purposes of—

[F4 (za) section 250A (replacement domestic items relief: see subsection (7)),]

(a) Chapter 4 of Part 4 of CTA 2010 (relief for property business losses: see section 67A of that Act),

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

(c) CAA 2001 (see, for example, sections 250 and 250A of that Act).]

(3) This Chapter also supplements [F5 the provisions mentioned in subsection (2)] 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).

[F6 (4) This Chapter also supplements the provisions mentioned in subsection (2A) by providing in certain circumstances for the profits of the EEA furnished holiday lettings part of an overseas property business to be calculated separately (see sections 250 and 250A).]

Textual Amendments

F1 S. 264(2)(za) inserted (with effect in accordance with s. 73(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 73(7)

F2 S. 264(2)(a) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 602 (with Sch. 2)

F3 S. 264(2A) inserted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(2)(a)

F4 S. 264(2A)(za) inserted (with effect in accordance with s. 73(8)(9) of the amending Act) by Finance Act 2016 (c. 24), s. 73(7)

F5 Words in s. 264(3) substituted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(2)(b)

F6 S. 264(4) inserted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(2)(c)

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 [F7 210 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 [F8 105 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.

Textual Amendments

F7 Words in s. 267(2) substituted (19.7.2011) (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(3)(a)

F8 Words in s. 267(3) substituted (19.7.2011) (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(3)(b)

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 [F9 105].

(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.

[F10 (7) This section is to apply separately in relation to accommodation in the United Kingdom and accommodation in EEA states F11 ....]

Textual Amendments

F9 Word in s. 268(3) substituted (19.7.2011) (with effect in accordance with Sch. 14 para. 10 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(4)(a)

F10 S. 268(7) inserted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(4)(b)

F11 Words in s. 268(7) omitted (31.12.2020) by virtue of The Taxes (Amendments) (EU Exit) Regulations 2019 (S.I. 2019/689), regs. 1, 16(3) (with regs. 39-41); 2020 c. 1, Sch. 5 para. 1(1)

[F12 268A Under-used holiday accommodation: letting condition not met U.K.

(1) This section applies if—

(a) during an accounting period a company lets qualifying holiday accommodation,

(b) the accommodation is let by the company—

(i) during the next accounting period, or

(ii) during the next two accounting periods,

(c) the accommodation would (apart from this section) not be qualifying holiday accommodation—

(i) during the accounting period mentioned in paragraph (b)(i), or

(ii) during both of the accounting periods mentioned in paragraph (b)(ii),

only because of a failure to meet the letting condition (see section 267(3)), and

(d) there was a genuine intention to meet the letting condition for the period within subsection (1)(c)(i) or each of the periods within subsection (1)(c)(ii) (as the case may be).

(2) If the company makes an election in respect of that accommodation for any accounting period in respect of which the failure mentioned in subsection (1)(c) occurs, the accommodation is to be treated as qualifying holiday accommodation for that accounting period.

(3) Subsection (2) does not apply for the purposes of section 268 or subsection (1)(a).

(4) If an election is not made for the first of the accounting periods within subsection (1)(c)(ii), an election may not be made for the second.

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

(6) References in subsection (1)(a) and (c) to qualifying holiday accommodation include accommodation treated as such under section 268.]

Textual Amendments

F12 S. 268A inserted (19.7.2011) (with effect in accordance with Sch. 14 para. 11 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(5)

Separate profit calculations U.K.

269 Capital allowances and loss [F13 relief: UK property business] 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 [F14 Chapter 2, 4 or 6 of Part 4 of CTA 2010] (loss relief) applies in relation to a loss made in either of those parts. F15 ...

F15 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(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.

Textual Amendments

F13 Words in s. 269 heading substituted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(6)

F14 Words in s. 269(2)(b) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 603 (with Sch. 2)

F15 S. 269(2)(c) and word omitted (with effect in accordance with s. 74(4) of the amending Act) by virtue of Finance Act 2016 (c. 24), s. 74(3)(b)

[F16 269A Capital allowances and loss relief: overseas property business U.K.

(1) If an overseas property business consists of both—

(a) the commercial letting of furnished holiday accommodation in one or more EEA states (“the EEA 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 EEA furnished holiday lettings part and the other part.

(2) The calculations must be made if—

(a) section 250 or 250A of CAA 2001 (giving effect to allowances and charges) applies to the EEA furnished holiday lettings part or the other part, or

(b) any provision of Chapter 2, 4 or 6 of Part 4 of CTA 2010 (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.]

Textual Amendments

F16 S. 269A inserted (19.7.2011) (with effect in accordance with Sch. 14 para. 9 of the amending Act) by Finance Act 2011 (c. 11), Sch. 14 para. 7(7)