Financial Information

The Detaildreamstime_m_29794179 (1)

Commission is charged on rent (plus any pet income):
15% + VAT on School Holiday weeks (excluding February half term); 20% + VAT on the remainder. 
(This commission covers the entire marketing and booking process; it does not cover problem resolution at properties, see below.)
Joining Fee: £150 + VAT
Annual Renewal Fee: £30 + VAT
Visit Britain Annual Inspection Fee: £72 + VAT

Management:

Two Options as detailed in the prospective owner’s booklet:

1. Owner Managed. Assistance in finding a housekeeper, if required, will be charged for.
2. Office Support (Annual Contract)
1 & 2 Bedroom Properties: £27 + VAT per month
3 Bedroom Properties: £32 + VAT per month
4 & 5 Bedroom Properties: £37 + VAT per month
Larger properties: POA

These fees include housekeeper recruitment, processing monthly invoices and help with solving problems ie: 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 45p per mile where applicable.

In both cases your housekeeper is self-employed and is responsible for declaring any earnings over and above their personal allowance to the Tax office and NI.  As they are self employed they should either have their own Public Liability insurance or your property Public liability should also cover any accidents at the property.

housekeepingOwner Bookings

It’s your home and we want you to enjoy it! However the partnership only works if we adhere to the following:

• Owner bookings must be submitted to us in writing, preferably by email.
• An owner booking may not be regarded as confirmed until DCC have responded in writing, if a provisional booking from a guest exists on the required dates this must take precedence.
• Owners must make available to DCC a minimum of 13 weeks between April and October.
• Owner bookings for the following year must be submitted before 30th September.  These can be amended or added to during the year but after this deadline the diary is live and a guest booking will take precedence.

Owner Payments

Guests pay a 20% deposit payment when booking their holiday. These funds are retained in a separate Client Account. Balance payments are made 8 weeks prior to their holiday. Full payments are released into owner accounts at the end of each month for bookings that fall within the following 8 weeks.

Insurance: £2 million of Public Liability cover is required. Three local brokers very familiar with insurance policies required for holiday letting properties are David Upshall, Dorchester – 01305 268883 and Boshers, Bideford – 01237 429444. For thatched properties please contact David Upshalls, Dorchester – 01305 268883 or Thatch Cover – 01392 409466.
Council Tax: If you are currently paying Council Tax then you should apply for a Business Rate Valuation, and then arrange for a commercial refuse collection.
VAT: Holiday rental is a ‘taxable supply’ and may be liable to VAT; approximately 17% 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 a total turnover below the VAT registration limit (currently approx £81k).

dreamstime_m_55172300Tax

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, business rates, refuse collection, 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 & Keeping, our accountants (01305 251333) have provided us with the following statements:

Below is a summary of the furnished holiday lettings rules based on our understanding of the current legislation. It 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 tax advice or used for 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 most 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:
a. The normal tax year if it is a continuing period of holiday letting;
b. If the letting is new, the first 12 months starting from the date of the first letting; or
c. 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 Holdover 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.