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Furnished Holiday Lettings – IHT efficient or not?

There is an inheritance tax (“IHT”) relief called “Business Property Relief.” This means that some business assets are – effectively – exempt from IHT. Whilst let property is not included in this favoured list, property available as furnished holiday lettings “may” “sometimes” qualify for the IHT relief.

A recent tax case – in connection with the estate of a Mrs Pawson – has emphasised this ambiguity. Whilst the First Tier Tribunal allowed the IHT relief, the Upper Tribunal has agreed with H M Revenue & Customs and disallowed it.

The basic rule is: the more services you can provide, then the better chance there is of succeeding with a “BPR” claim.

Provision of bed linen and towels is a very minimum to be provided but anything else you can offer will add to the argument that you are due the valuable IHT relief. Examples of extra services may include acting as a booking agent for local attractions – theatre, sports centre etc; offer mid week cleaning; use of tennis courts or other sports facilities on site; provide meals – a picnic service perhaps?

The rules are so labyrinthine it is recommended that you contact Victoria Bishop, robinson+co’s Tax Partner, for advice specific to your situation.

Victoria can be contacted on 01900 603623 or victoriabishop@robinsonco.co.uk.

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robinson+co is a trading name of robinson+co (Gosforth) Limited registered in England & Wales 08088245. Registered office Oxford Chambers, New Oxford Street, Workington CA14 2LR. Regulated by the Institute of Chartered Accountants in England & Wales for a range of investment business activities.
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