VAT for Furnished Holiday Lets

Furnished Holiday Let income will be subject to VAT if your total income exceeds £85,000. Don’t forget that total income takes into account income from other businesses operated by the same person or persons.

 The income from property that qualifies as UK holiday accommodation will be standard rated for VAT. This assumes that the property is not let out on a long term residential basis, but rather as short term, furnished sleeping accommodation that is held out for visitors. 

Unless you have or will suffer large amounts of input VAT on costs and expenses, you are likely to be better off applying to join the VAT Flat Rate Scheme.

 Under the FRS you do not reclaim any input VAT unless it relates to capital expenditure of £2000 or more. Instead, you apply a percentage to your turnover to calculate the VAT to pay to HMRC and the percentage is determined by HMRC and a table is available on the HMRC website.

The Flat Rate Percentage for accommodation is 10.5% but in addition you receive a 1% discount in your first year of VAT registration.

Otherwise, you could be paying up to one sixth of your income in VAT.



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