Brits urged to claim tax back

13 May 2009

A Manchester-based tax advisor is urging Britons who own and let out holiday homes in Europe to check if they are able to claim back thousands of pounds in tax following new measures announced the recent budget.

The announcement by Chancellor Alistair Darling centres around tax relief on letting out ‘furnished holiday lettings’ or second homes.

Tony Woolley says: “Traditionally, those with second homes that are based in the UK have been able to claim tax relief on losses sustained by the property. However, this did not apply to those who have homes on the continent.

“Second homes are usually only rented out for a few months a year and, after factoring in allowances available for the costs of furnishing the property as well as the ongoing costs of maintaining the property such as interest on mortgage repayments, letting charges and repair and maintenance bills, many owners incur annual losses.

“H M Revenue & Customs (HMRC) has always allowed those with UK based second homes to offset the losses against their annual income if their rental property met certain criteria - meaning a 40% tax payer who incurred a £10,000 loss on their second property could claim tax relief of £4,000.”

However, Woolley, tax adviser and senior partner at Manchester accountants and business advisers Campbell Woolley, is urging people to act fast as they only have a few months to apply for a potential windfall.

The HMRC will abolish all tax relief on UK and other EEA ‘furnished holiday lettings’ from April 2010.