Useful Information for Holiday
Accommodation Owners

Bed & Breakfast

“Forecasts predict hat the money spent by Britons holidaying in the UK will grow
by 2.6% a year in real terms this decade” Deloitte and Oxford Economics

Advertising On E-Bay

An effective way of advertising your holiday accommodation is by using E-bay. There are several ways you can do this:

Classified Ad - this is just like a classified advert in a newspaper, but with a much larger audience. Include the address of your Holiday Accommodation Website on your advert so potential customers can view the full details of your property and book direct with you.
Auction - encourage more people to bid with a low start price, with an optional reserve price if you wish. Auctioning a fixed date, whether for long weekend, week or fortnight, is particularly good if you have available dates during the low season. You could also include a Buy It Now option, which would allow customers to purchase the holiday at a fixed price.
Fixed Price - this means that a customer can make the purchase immediately at the price you set. This would be for a fixed date, whether for long weekend, week or fortnight. It is particularly useful for late availability offers. You can also allow customers to make a Best Offer if you are flexible on the price.

Selecting the best selling format for your item is key to having the greatest success with your sale. Find out more.

For a beginners guide to selling on E-Bay, refer to the Selling Basics Guide and E-bay Seller Fees.

Tax

If you are new to running your own business, HMRC (HM Revenue & Customs) have a useful "Thinking of working for yourself" guide.

Tax on Furnished Holiday Lettings (FHL)

Qualifying as a furnished holiday let - Before April 2012

If you let out a furnished holiday home in the UK or elsewhere in the European Economic Area (EEA), your rental income may be treated differently for tax purposes from other rental income. However, your property must keep to some rules known as 'qualifying tests'. Find out more

In summary, to make sure your property qualifies as a furnished holiday letting, it must be:

in the UK or EEA (European Economic Area)
furnished
available for commercial letting to the public, as holiday accommodation, for at least 140 days a year
commercially let as holiday accommodation for at least 70 days a year (the rent must be charged at market rate, not at cheap rates to friends and family)
a short term letting of no more than 31 days

Tax rules on rental income

If you let out a furnished holiday home in the UK or in the European Economic Area (EEA), the tax rules for these furnished holiday lettings are different from the rules for residential lettings. Find out more

The rules let you:

reduce your profit by claiming 'capital allowances' for the cost of furniture and fixtures that you provide inside the property you let
offset any losses against income from the same FHL business
when you sell the property you may be able to take advantage of extra reliefs that'll bring down your Capital Gains Tax bill.

Changes to the furnished holiday letting rules

The 2011 Budget announced "Furnished holiday lettings (FHL) – From April 2011, new tax rules for FHL will take effect, so that loss relief may only be offset against income from the same FHL business. Letting and availability thresholds will be increased from April 2012. "

The 2009 Budget announced an intention to withdraw these rules from 6 April 2010 for Income Tax and Capital Gains Tax. For Corporation Tax the date was 1 April 2010.

The June 2010 Emergency Budget announced that the change won't take place now and the rules will continue to apply for the 2010-11 tax year.

The proposals – set out in the document Furnished Holiday Lettings Consultation – are to:

Increase the number of days a property must be available for letting to the public from 140 days to 210 days.
Increase the number of days a property must be actually let to the public from 70 days to 105 days.
Restrict the loss relief from a furnished holiday let so it can only be set against certain income from the same business, rather than against a taxpayer’s other income.

The advantageous entrepreneurs’ relief would still be available, and an individual who sells a FHL would continue to be liable to CGT at only 10% on the first £5 million of capital gains realised.

Expenses and allowances on income from property (FHL)

You can deduct certain expenses and tax allowances from your rental income in order to work out your taxable profit (or loss). Find out more

The expenses you can deduct from letting income include:

Letting agent's fees
Legal fees for lets of a year or less, or for renewing a lease for less than 50 years
Accountant's fees
Buildings and contents insurance
Interest on property loans
Maintenance and repairs to the property (but not improvements)
Utility bills (like gas, water, electricity)
Rent, ground rent, service charges
Council Tax/Business Rates
Services you pay for, i.e. cleaning or gardening
Other direct costs of letting the property, like phone calls, stationery, advertising, cleaning materials

Other FHL Information

HMRC Furnished Holiday Lettings - Questions & Answers 22 June 2010 Find out more
HMRC PIM4100 - Furnished Holiday Lettings Manual Find out more
Which? guide to "Tax on property and rental income - How rental income is taxed" Find out more

Tax on B&B, Guest House and Hotels and similar

Bed & Breakfast, Guest houses, Hotels and other accommodation of similar type will come under Small Business Accounts and Tax Rules. Unlike a rental business, where income is classed as an investment, the B&B and similar is a true business occupation giving the owners tax relief advantages when it comes to claiming expenses. Find out more

Tax Returns

If your total income from UK property in the tax year is under £68,000 a year you can group the expenses as a single total on the Self Assessment tax return. If it's £68,000 or more, you'll need to show your expenses separately. If your taxable income from property is under £2,500 your Tax Office may be able to collect any tax you owe through PAYE (Pay As You Earn) if you already pay tax this way. Find out more

VAT

If your turnover of VAT taxable goods and services supplied within the UK for the previous 12 months is more than the current registration threshold of £70,000, or you expect it to go over that figure in the next 30 days alone, you must register for VAT. Find out more

There is a HMRC guide which explains how supplies by hotels, inns, Guest Houses, bed and breakfast and similar establishments should be treated for VAT purposes. It also explains how you should treat supplies of holiday accommodation, including caravans and camping facilities. Find out more

Business Rates & Council Tax

The Valuation Office Agency (VOA) is an executive agency of HM Revenue & Customs (HMRC). They provide basic guides to the rating of different holiday accommodation types:-

Guest houses and bed & breakfast accommodation Find out more
Holiday cottages and self-catering units Find out more

Insurance

In these days of higher risks and a litigious public, adequate insurance cover is vital. The types of cover you need to consider are:

Buildings cover - your mortgage company will insist on this.
Contents cover - your contents should be adequately covered.
Public liability - covers you for civil actions brought by guests who may sustain injury on your property.
Employee liability - this cover is a legal requirement if you employ anyone, even casual labour, in the process of running your holiday accommodation business.
Cancellation insurance - in case guests let you down.
Personal accident, health and key-person insurance - in case you are incapacitated at critical times.
Motor insurance for business use - you are likely to use your vehicle for the holiday letting business.

Safety

Fire Safety

If you are providing accommodation for paying guests you must make sure you meet the Regulatory Reform (Fire Safety) Order 2005. A Fire Risk Assessment book should be kept in your holiday accommodation. This should be signed every week, and include a map of fire exits, extinguishers, fire blanket and detectors. Use the following links for simple and practical advice:

Fire Safety law and guidance documents for business. Find out more
A short guide to making your premises safe from fire Find out more
Fire Safety Risk Assessment - Sleeping Accommodation Find out more

It is the landlords responsibility as supplier or agent of holiday or let accommodation to ensure that all upholstered furniture complies with the Furniture & Furnishings (Fire) (Safety) Regulations 1988. Find out more

If in any doubt as to what course of action to take, it is recommended that you contact a fire safety professional.

Gas Safety

In the UK, holiday let landlords have a legal duty to maintain, and have an annual safety check on all gas appliances and flues by a Gas Safe Registered engineer. Find out more

Carbon Monoxide Alarms are strongly recommended near boilers & log burners etc. Find out more

Electrical Safety

Anyone who lets holiday accommodation is required by law to ensure the equipment they supply as part of the tenancy is safe. The Electrical Equipment (Safety) Regulations 1994 and Consumer Protection Act 1987 requires that all mains electrical equipment (cookers, washing machines, kettles, etc), new or second-hand, supplied with the accommodation must be safe. Find out more

The Electrical Safety Council have produced a Landlords Guide to Electrical Safety Find out more

Other Considerations

Private water supplies must be tested and a risk assessment carried out by local authorities according to the new regulations of 2010. Find out more
Assess all possible risks, such as trip hazards, stair & handrail safety.
List emergency telephone numbers, for example local doctors, hospitals.
Provide a Fire Guard to protect children.
There must be adequate ventilation in all living spaces.
Include instructions on how to use all appliances, fireplaces etc.
A TV licence is required if the accommodation is a separate property to your own.
If you are constructing new accommodation, New Build Regulations state that you must make reasonable provision for disabled persons (doors, slopes, handles etc.)

Other Resources

The Pink Booklet is produced by the publishing department of Visit Britain with the aim to provide accessible legislative advice to accommodation providers. Find out more

For a summary of legal obligations and current regulations, there is a quick guide which covers all the inspections which must be conducted before a property is let. Find out more