Holiday letting in UK

In UK letting a fully furnished holiday home may mean that the income earned is treated in a different way than other rental income. The other property letting income is classified as an investment income and holiday lets are considered as a business. For holiday lets, there are some tax incentives but your accommodation must comply with Inland Revenue rules that are known as qualifying tests which are:

-    Furnished rental accommodation
-    Actually let as vacation let for at least 70 days in a year
-    Short term lets of not more than 31 days
-    Your occupier cannot stay for more than 31 days in any seven month period
-    Based in the UK
-    Actually let as a holiday let for at least seventy days a year
-    Available for holiday letting to public for a minimum of 140 days a year
-    Only lets over a duration of at least 7 months.

The income earned from your holiday let is subject to income tax. But you can off-set some expenses for example:

-    Insurance
-    Lighting and heating
-    Decorating
-    Payments of mortgage interest
-    Repairs and maintenance
-    Letting agent and Legal fees
-    Maintaining fees and cleaning cost

If you roll over your income within three years to some other holiday letting property, you can avoid payment of capital gains tax on sale of the property. Better to take professional advice before getting into holiday letting.

Buy-to-let property insurance

If you rent houses and/or flats to tenants; either for a short or long period of time, you will need buy-to-let property insurance which is also known as residential property owners insurance. You can buy cheap buy-to-let property insurance if in case you rent for five or less properties in the UK. In both the cases, you must have at least minimum level of required insurance in order to protect yourself. If you are looking to become a property owner with a letting business then in your insurance policy you must have the following minimum provisions:

Theft:
This is very important if you are renting out a fully furnished property and if the property is not furnished, you can discuss with your tenants whether they should have home contents insurance

Lost earnings:
You may have to keep your property empty when looking for new tenants. If rental income is the only source of income for you then you should ensure that you have lost earnings insurance to compensate during the period.

Fire:
You must have insurance for your property against any fire.

Employee liability insurance:
It is for employees who come at your place for repairing any damage etc.

Public liability insurance:
This is very important as it will protect you against any claims your tenants or any third party may have on your property.

Legal expenses insurance:
Legal expenses in UK can be expensive. So you must have this in your policy.

Natural disaster or Tempest insurance:
Insuring your property against natural disasters like storm, flood etc.

Buy holiday let to increase your income

Many people are now realising that investing in property and especially in holiday letting can bring them large income every year. This depends on the proper location of your holiday let and also if you get the best deal on your mortgage for buying the holiday let property. You can save money by taking advantage of the tax breaks if you buy holiday let properties. When you bring an income from the property, it will be considered as a business by the tax authorities whereas other forms of property letting are considered as an investment income.

You have to prove to the tax authorities that your buy to holiday let is available for letting for the public for at least 140 days in a year and you must let it successfully for at least 70 days, in order to take advantage. In a period of seven months, you cannot let the property to the same tenant for more than 31 days. You also cannot claim tax breaks for the time you were residing there.

Your holiday letting house must be fully furnished so as to get advantage of the tax breaks. Any lets that you make must be at full cost. The other important factor is to take cover for your holiday let property. You must consider a specialist broker to get mortgage for the buy to holiday let property. The broker will research and help you when mortgages confuse you a lot.