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Financial Information

Commission Rates and Net Returns:

Our commission is 15% + VAT for the 12 school holiday weeks (excluding February half-term) and 20% + VAT on the remainder. We do not increase these rates if we become involved with arranging housekeeping; we charge a monthly fee. We do not offer discounted rates to tempt you in and then raise the rate later, we think that is unprofessional. This commission covers the entire marketing and booking process; it does not cover problem solving at properties (see below).

There is a natural tendency for owners new to holiday letting to be mislead by peak summer rent levels. Whilst this is important, the real question is 'what will my net return be?' Rent levels at other times of the year, occupancy and commission rates as well as the peak rent provide a clearer picture.

Fees & Associated Costs:

Joining Fee:  £150 + VAT

Annual Renewal Fee:  £30 + VAT

Visit Britain Annual Inspection Fee:  £72 + VAT

 

Housekeeping:  2 Options: N.B.  Owners use self employed housekeepers in both cases.

- Owner fully responsible.  (Assistance in finding a housekeeper, if required, will be charged for.)

- Office Support (Annual Contract):

1 & 2 Bedroom properties:  £25 + VAT per month

3 Bedroom properties:  £30 + VAT per month

4 or more Bedroom properties:  £35 + VAT per month

 

These fees include housekeeper recruitment, processing monthly invoices and help with solving problems i.e:  4 telephone calls and one written contact free of charge.  Subsequent calls are charged at £2; second written contact at £20.

Call-out charge – applies to both housekeeping options: £20 per hour plus 40p per mile where applicable.

Fees are not required in advance but are deducted from monthly statements.

Insurance:  £2 million of Public Liability cover is required. (A local broker very familiar with holiday letting properties is David Upshall, Dorchester – 01305 268883.)

Council Tax arrangements/discounts have been reviewed and it may be worth opting for a Business Rate Valuation which removes any restrictions on letting.

VAT:  Holiday rental is a ‘taxable supply’ and may be liable to VAT; approximately 20% of the rental may be lost unless the letting is done by an individual or partnership that is not registered for VAT and continues to have total turnover below the VAT registration limit (currently approx £60k).

Furnished Holiday Letting & Tax Advantages

Other tax implications:  HMRC currently regards furnished holiday letting as a business.  You can usually deduct from the net rent received, repairs/renewals of fixtures, fittings and the fabric of the property together with all cleaning and laundry, rates, insurance, electricity/gas/oil/logs, TV licence, gardening, mortgage interest.  Losses can be carried forward.  Profits are regarded as earned income (it may be advisable for the property to be in the name of the lower income earner).

 

Edwards and Keeping, (our accountants - 01305 251333) have provided us with the following statements regarding Furnished Holiday Letting:

 

This is in no way a comprehensive review of the legislation or individual circumstances and as such it is not intended to be relied upon as a tax planning of any sort.  If you are in doubt regarding your specific tax situation, please contact your tax advisor, if you do not have one, we would be happy to help.

 

If you let out a furnished holiday home in the UK (or elsewhere in the European Economic Area) the rental income may be treated differently for tax purposes from other rental income, subject to meeting a number of qualifying tests.

 

To qualify as a furnished holiday letting the property must:

 

- be furnished and located in the UK or EEA;

 

- be available for letting to the public as holiday accommodation for at least 210 days a year;

 

- be actually let as holiday accommodation for at least 105 days a year at the market rent;

 

- not be let for a continuous period of more than 31 days to the same tenant where such periods of long term occupation exceed more than 155 days a year.

 

 

These tests will be applied to a relevant period of either:

 

- The normal tax year if it is a continuing period of holiday letting;

 

- If the letting is new, the first 12 months starting from the date of the first letting; or

 

- If the holiday letting is ended, the last 12 months ending on the date of the last letting.

 

 

Tax Advantages

 

If the property meets the qualifying tests during the relevant period the following tax advantages may be available:

 

Losses can be set against total taxable income and are not restricted to the rental business.  As legislation is under discussion this may change to: losses can only be set against profits on the qualifying property.

 

Capital allowances in respect of qualifying expenditure can be claimed on integral features, furniture, furnishings and the like in the property.

 

The property qualifies for a number of Capital Gains Tax reliefs including Entrepreneurs Relief, Rollover Relief and Gift Rollover Relief.

 

Inclusion of income as relevant UK earnings when calculating maximum pension contributions.

 

Inheritance Tax – Furnished holiday lettings do not qualify for Business Asset Relief.

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