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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

Blog

Employee wellbeing - strategies for employers

This blog was previously published on LinkedIn on 14th February 2018.

Two recent surveys have highlighted the extent of stress in the workplace. The research found more than two-thirds of employers have seen an increase in reported instances of stress and mental health-related illnesses, whilst over a quarter of employees go into work when they are suffering from stress, anxiety or depression.

However, there was a marked growth in corporate wellbeing programmes last year, with most employers considering themselves responsible for influencing their employees’ health behaviours. The number of organisations with designated funding for their health and wellbeing programmes has also increased, with many having a specific budget in place. This has contributed to more employers offering health programmes, for instance to encourage weight loss, and to help people stop smoking or get more exercise.

More organisations are also embracing technology as part of their strategies, with considerable growth seen for health apps and virtual GP services. This trend is expected to gain pace in 2018, as employee engagement strategies embrace technology.

Despite the good news, one worrying finding was that many employees still go into work when they are ill. Reasons given by employees for going to work when ill include: 

• feeling that they had too much work to do;

• worrying about the burden of their absence on their team;

• anxiety about job security. 

Whatever the reason, a doctor’s advice to stay at home is often ignored. This can be counterproductive, because early diagnosis and treatment improve the chance of a faster recovery, avoiding long-term absences from work. Wellbeing should be a cornerstone of any workplace health policy and promoting the importance of listening to medical advice is a key part of that.

Furnished Holiday Lets - qualifying conditions & elections

To gain the tax advantages of a Furnished Holiday Let (FHL), the property must qualify, and HMRC have a series of qualifying conditions which must be met.

If the criteria is still not met, the property will be treated as a buy-to-let property and taxed accordingly.  As such the benefits associated with an FHL would be lost.

As well as the requirement that the FHL is located in the UK or European Economic Area (EEA) and must be furnished to a standard sufficient for normal occupation, the three main qualifying conditions are:

  • Be available for at least 210 days in the tax year
  • Be let commercially to the public for at least 105 days in the tax year
  • Not be let for more than 155 days in a tax year for periods of 31 continuous days or more.

Private use of the property, to include use by friends or family at a lower than market rate, should also be taken into consideration, and claims for expenses adjusted accordingly.

If you do not manage to reach the 105 day letting condition, there are elections available if more than one property is owned, or if your property reaches the threshold in some years but not others.

Averaging Election

The individual can make an averaging election where:

  • there is more than one property
  • some properties meet all three conditions and some fail the letting condition (i.e. let commercially for at least 105 days in the relevant period) only

The averaging election can be made to average out the let days with respect to properties specified in the election.  If the average number of days let is over 105 then all the properties are deemed to meet the letting condition.  The election applies for the tax year in question only.

Please note that it is not possible to average lettings of UK FHLs and EEA FHLs. They must be treated separately and be subject to separate elections, where appropriate.

There are also specific time limits, which apply when wishing to make an election.

Period of grace election

The second provision is known as the ‘period of grace’ election. This election applies where all three conditions were met in a tax year, but in the following tax year and the tax year after the letting condition is not met despite a genuine intention to let the property for at least 105 days in the tax year.

An example of when this could happen is where the taxpayer marketed a property to the same or a greater level than in successful years, or where lettings are cancelled due to unforeseen circumstances.

The period of grace election allows the property to qualify as a FHL by deeming the letting condition to be met, as long as the other two main conditions are met for the tax year (i.e. the pattern of occupation and availability conditions).

This election can be very useful where the taxpayer only has one FHL property.

Due to the complexity with the elections and making claims advice should always be taken from an expert to ensure you are being compliant with the rules. If you are looking for advice relating to your FHL, please contact French Duncan Tax Senior Jen Kinnear either by email to j.kinnear@frenchduncan.co.uk or call 01786 451 745.

This blog is part of a series of eight, you can see all other blogs here:

1. Furnished Holiday Lets - an introduction & your obligations

2. Furnished Holiday Lets - Income Tax & Capital Gains Tax

3. Furnished Holiday Lets - Non Resident Landlords

4. Furnished Holiday Lets - VAT

5. Furnished Holiday Lets - Making Tax Digital

6. Furnished Holiday Lets - Inheritance Tax

7. Furnished Holiday Lets - Conclusion & Services

 

Furnished Holiday Lets - an introduction & your obligations

Furnished Holiday Lets (FHL) are becoming more and more popular in the UK, and particularly in Scotland, with holiday makers desires for a ‘staycation’ only likely to increase following the UK decision on Brexit. But are you aware that these properties come with a different set of tax rules compared to your average rental or HMO property?

These rules can prove tax advantageous, as many reliefs which are normally only available to trading businesses can be claimed.

Obligations as a Landlord

Firstly, as a landlord of a property, you are obliged to report your rental income to H M Revenue and Customs, even if you are not making a cash profit.  This point is often missed with landlords and can mean we usually end up being contacted by landlords once HMRC have contacted them.

As with a standard rental property, due to the tax rules associated with allowable expenses, an FHL landlord, although making a cash loss on the property, may have a profit for tax purposes.  Where there has been a loss of tax to HMRC, they will look to charge both interest and penalties.

The level of penalties is dependent on several factors including whether HMRC have prompted the individual.  Understanding your reporting requirement is clearly very important.

The reporting of this income is currently done in the UK through the Self Assessment system.

To gain the tax advantages associated with an FHL, the property must qualify. HMRC have a series of qualifying conditions which must be met, including the location (the property much be in the UK or the EEA), the number of days the property is available and the number of days it is actually let. In addition, it must be let commercially with a view to making a profit.

You may be aware that over the past few years there have been many changes in tax for rental properties in terms of relief for loan interest, wear and tear allowance and LBTT for additional properties. Letting a property as a furnished holiday let is a way to shelter your rental income from the tax impacts of some of these changes but with Making Tax Digital (MTD) potentially just around the corner what will the future hold?

With so many changes both past and future it has never been more important to have up to date guidance and advice on this subject.

Conclusion

It is without a doubt that Furnished Holiday Lets attract a range of tax efficient reliefs and allowances that can be utilised year on year. It is important however that these reliefs are not taken for granted by becoming complacent with the rules surrounding this type of property. The occupancy test is something that is considered on an annual basis, and an FHL property can lose these tax efficient reliefs, despite the property being let in the same fashion as previous years.

By forward planning, this criteria can be considered to ensure that the conditions are met and eligibility for these reliefs is preserved. A forward thinking approach to any property investment can be beneficial, as it can help to mitigate any current and future tax which may be payable.

There is a great deal of information to digest when managing an FHL and as such taking professional tax advice is essential.

If you are looking for advice relating to your FHL, please contact French Duncan Tax Senior Jen Kinnear either by email to j.kinnear@frenchduncan.co.uk or call 01786 451 745.

This blog is part of a series of eight, you can see all other blogs here:

1. Furnished Holiday Lets - qualifying conditions & elections

2. Furnished Holiday Lets - Income Tax & Capital Gains Tax

3. Furnished Holiday Lets - Non Resident Landlords

4. Furnished Holiday Lets - VAT

5. Furnished Holiday Lets - Making Tax Digital

6. Furnished Holiday Lets - Inheritance Tax

7. Furnished Holiday Lets - Conclusion & Services

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