If you own a furnished holiday let in the UK, it’s important to understand the occupancy rules set out in the HM Revenue & Customs (HMRC) HS253 guidelines. Meeting these conditions can make your holiday let a profitable and tax-efficient business. In this post, we’ll explain what the occupancy rules are, what records you need to keep, when you can use a grace period, and how to monitor your occupancy, along with some examples of records.
Occupancy Rules
To qualify as a furnished holiday let, your property must be:
- available for bookings for at least 210 days per year
- rented out to paying customers for at least 105 days of the year
- lettings that exceed 31 continuous days must not exceed more than 155 days during the year. Lettings exceeding 31 days don’t count as holiday lets unless there are unforeseen circumstances.
If your property meets these criteria, you can take advantage of certain tax benefits, such as:
- claiming capital allowances on furnishings and equipment – these allowance can be substantial where a previously residential property is changed to Holiday Lets (Serviced Accommodation)
- paying business rates rather than council tax
- Business Assets Disposal Relief
- Business Asset Rollover Relief
- Gift Holdover Relief
- Splitting profits with your spouse without needing a Form 17
- Full recovery of Mortgage Interest
Record-keeping
To prove that your property meets the occupancy rules, you need to keep accurate records. These should include:
- all rentals, including dates and names of customers
- evidence of the availability of the property for rent, such as an online listing or booking system
- any periods when the property was unavailable for rent, such as maintenance or personal use
Monitoring occupancy
To ensure that you meet the occupancy criteria, it’s important to keep track of your bookings and availability. You can use a booking calendar to monitor the number of days your property is rented out and avoid exceeding the 31-day limit. There are also software programs that can help you manage your bookings and maintain records.
Examples of records
Here are some examples of records you should keep:
- A record of all bookings, including the dates of arrival and departure, and the names of the customers
- An availability calendar that shows when the property is available for rent
- Invoices and receipts for all expenses related to the property, such as maintenance, cleaning, and repairs
Many operators use Channel Managers such as
Airbnb and Vacation Rental Channel Manager Feature – Guesty
or property managers for example
Book Your Stay | Property management — Grandeur Property
Or you could use systems like
These will easily link to modern accounting systems like Accounting Software – Do Beautiful Business | Xero UK
Conclusion
Meeting the HMRC’s furnished holiday let occupancy rules can help you run your holiday let as a profitable and tax-efficient business. By keeping accurate records of your bookings, availability, and expenses, you can ensure that you meet the criteria and take advantage of the tax benefits. With the help of software and a good booking calendar, you can monitor your occupancy and avoid exceeding the 31-day limit.
steve@bicknells.net
