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Furnished holiday let tax guide

The global coronavirus pandemic has indisputably affected the self-catering holiday and tourism sector throughout the UK. Many holiday let owners are understandably concerned about the immediate and long-term impact COVID-19 will have on their business, as guests are forced to postpone or cancel their holiday due to the ‘stay at home’ measures.

We understand this is a worrying time for holiday home owners, as you may still have expenses such as mortgages and running costs to think about.

In a response to this unprecedented crisis, the UK government has instituted a full range of support measures that have been made available to UK businesses. As a holiday let owner you may be entitled to access support schemes, dependent on your circumstances.

Use the quick links below to find out about a particular topic, or continue reading for the full article:

Impact of COVID-19 on self-catering accommodation providers

On Monday 23rd of March 2020, the UK government intensified measures in response to the COVID-19 pandemic, in order to prevent the spread of coronavirus and save lives. All non-essential travel was prohibited and many businesses across all sectors were forced to close. Included in this was the provision of self-catering holiday accommodation.

Read the HMRC COVID-19 advice for accommodation providers

In line with this government advice, self-catering accommodation providers and letting agencies have put in place a variety of policies to allow guests to either postpone or cancel their holiday.

Click here to read our up to date COVID-19 policy for guests

Due to this potential loss of income, holiday let owners may be eligible to receive financial assistance from the government. Depending on the nature of your business the schemes vary significantly –  below we have summarised a few of the government support schemes which may be relevant to you, but please contact your local authorities, government or a legal professional for advice.

UK government financial support schemes for businesses

Tax deferral scheme

In an effort to relieve cash flow at a time when it is needed most, temporary delays have been offered for tax and VAT payments.

Income tax deferral:

The deadlines for paying tax bills have changed. Usually the deadline for paying a tax bill is:

  • 31st January – for any tax owed for the previous tax year on account
  • 31st July – for second payment on account

Because of the crisis, you can delay making your second payment on account. If you choose to delay, the date for the second payment on income tax has moved from 31st July 2020 to 31st January 2021. This is an automatic process and does not need to be applied for. For more information, click here:

Deferral of VAT payments:

Not all holiday let businesses may be registered for VAT, but for those that are, payment can be deferred.

If you are a UK VAT registered business and have a VAT payment due between 20th March 2020 and 30th June 2020, you have the option to defer payment. Payment will now be due by the 31st of March 2021 in order to help your business manage cash flow. Click here for more information:

Business rates relief for holiday home owners

For those owners that currently pay business rates on their holiday let, there is a business rates relief scheme available, which offers a 12-month payment holiday for 2020/2021 for all retail, hospitality and leisure businesses in England. If you qualify, you do not need to take any action, your local council will apply the discount automatically.

Many owners whose property qualifies as a Furnished Holiday Let will already benefit from small business rates relief so this scheme won’t be applicable.

You can estimate the business rate relief using the business rates calculator.

Contact your local council if you’re not getting a relief you think you’re entitled to.

Check if your retail, hospitality or leisure business is eligible for business rates relief due to coronavirus (COVID-19)

Business support grant funds for holiday home owners

In addition to business rates relief, the government is also providing support to small businesses and those in the retail, hospitality and leisure sectors. This support will take the form of two grant funding schemes, the Small Business Grant Fund (SBGF), and the Retail, Hospitality and Leisure Grant Fund (RHLGF).

Small Business Grant Fund (SBGF)

Under the Small Business Grant Fund (SBGF), all eligible businesses in England in receipt of either Small Business Rates Relief (SBRR) or Rural Rates Relief (RRR) in the business rates system will be eligible for a payment of £10,000.

Retail, Hospitality and Leisure Grant (RHLG)

Under the Retail, Hospitality and Leisure Grant (RHLG) eligible businesses in England with a rateable value up to £15,000 will be eligible for grants of £10,000. For businesses with a rateable value between £15,000 and £51,000 will be eligible for grants of £25,000.

The schemes will be delivered by local authorities – if you are eligible, they will be in touch with you to arrange payment.

Click here for more details on the Small Business Grant Fund/Retail, Hospitality and Leisure Grant

Self-Employed Income Support Scheme(SEISS)

If you are registered and qualify, the Self-Employment Income Support Scheme is open to you. It applies to anyone who reports trading profits through an income tax self-assessment. This initiative gives self-employed individuals a taxable grant worth 80% of average monthly profits, up to £2,500 per month.

The grant will be subject to income tax and national insurance contributions, but does not need to be repaid. The online service you will use to claim is not yet available, but the HMRC aim to make contact by mid-May 2020 and make payments by early June 2020.

Find out how HMRC will work out your income and profits if you’re self-employed or a member of a partnership in the UK and have lost profits due to coronavirus (COVID-19)

Self-employed individuals who pay themselves a salary through PAYE may be eligible for support through the Coronavirus Job Retention Scheme.

Bounce back loans

On 27th April 2020 the government announced new financial help for small and medium businesses through 100% government backed loans. This scheme will help small and medium-sized businesses affected by coronavirus (COVID-19) to apply for loans of up to £50,000. The scheme will be available from 4th May 2020. You can find full details of the scheme here:

Coronavirus Business Interruption Loan Scheme (CBILS)

The Coronavirus Business Interruption Loan Scheme (CBILS) supports small and medium sized businesses with an annual turnover of up to £45 million, to access loans, overdrafts, invoice finance and asset finance of up to £5 million for up to six years. It’s the government’s way of providing a level of guarantee for you to financial institutions in order to encourage the banks to provide finance at this time.

Click here for further information or to apply for the Coronavirus Business Interruption Loan Scheme

Furnished Holiday Let occupancy levels

As a result of the ‘stay at home’ measures currently in place, some holiday homes may not meet the specific occupancy levels required to qualify as a Furnished Holiday Let (FHL).

If this happens, you may be able to make a period of grace election. This means that as long as you qualified the previous year and can provide evidence that you genuinely intended to meet the letting condition but were unable to do so, the property can still quality as a FHL. If you do fall short on occupancy levels, we would recommend speaking to an accountant to confirm your position.

Visit the HMRC HS253 Furnished Holiday Lettings guide (2020) for further information on the period of grace election.

The next few weeks and months are likely to be extremely challenging for businesses, with those in the holiday letting market no exception. The current situation and governments efforts are changing constantly, and it’s important to make sure that you have the most up to date information. While we have done our best to provide an overview of information that may help, we urge you to keep up to date with official government sources. We recommend that you seek advice from your local authorities as well as an accountant or legal professional.

Business support pages:

* At the time of publishing, Coast & Country Cottages has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies. Generic information is contained within this article and each individual’s business affairs are different, so further advice should be sought from an accountant, legal professional or the UK Government.