Spring 2011 Newsletter Content Leading article... Anything up his sleeve? General tax... Relaxed association File under 'e' Research costs? Give early A tax on houses Pension changes Holiday entitlement EISy money VAT... 20:20 vision Horses for courses? Do it yourself That's entertainment All in the contract? Where am I? Law items... What's in a title? The privileged few Called to account Don't mince words

Holiday entitlement Rent is usually treated as investment income, which has some tax disadvantages compared with a trade. Traders get better tax relief for losses, and usually pay a lower rate of CGT when they sell business assets at a gain. For many years, the rules on 'furnished holiday letting' have allowed people who run short-term rental businesses to be taxed as if they were trading. Recently HMRC realised that properties anywhere in Europe had to be accepted as eligible – it wasn't possible to restrict the relief to the UK. The last government decided to abolish the special treatment of FHL, but Mr Osborne has decided instead to keep it with some restrictions. It will still be necessary for most lettings to be no more than 30 days, but the time the property has to be available for letting will increase from 140 to 210 days a year, and the time it is actually let will go up from 70 to 105 days. To give people a chance to adjust, these new limits will come in on 6 April 2012. There will be a 2-year period of grace for those who can't increase the actual letting immediately but are clearly making an effort to do so. It has been possible to claim FHL losses to get a tax reduction on other income. That's going from 6 April 2011 – any rental loss will only be relieved against rental income on another property. One of the big benefits of FHL is the ability to claim Entrepreneurs' Relief on a gain – an effective CGT rate of 10% rather than 18% or 28%. If you own a FHL property which won't qualify under the new rules, it will be important to think about the potential increase in the CGT liability. We'll be happy to advise you about the consequences of these changes.