January and February are busy months for most business owners. If you’ve been focusing on your year-end accounts and self-assessment deadline, you may have missed important announcements that may affect you.
Changes to holiday homes business rate rules-April 2023
Furnished property let as holiday accommodation is subject to business rates rather than council tax. However, in many cases, the extra cost is offset by Small Business Rates Relief (SBRR). Most holiday lets qualify for SBRR which brings the cost down to less than council tax for the area in question. A property qualified for SBRR if there was simply an intention to let it as a holiday rental.
April 2023 brings in a change to the rules that will tighten up the qualifying criteria for SBRR. Second homeowners will have to prove that it was available as a short-term, self-catering holiday let for at least 140 days in the previous year and will be again in the year ahead. Also, in the previous year, the property was actually let for at least 70 days of the 140 days.
You need to have this evidence to back up your SBRR claim from April 2022 onwards.
https://www.gov.uk/government/news/changes-to-business-rates-rules-for-self-catering-properties
Basis period. Adjustments to adjustments
The government is changing the basis period for calculating the tax due for self-employed businesses and partnerships. The rules are due to apply from the 2023/24 tax year. However, following the realisation that this may result in higher taxes, certain aspects of the changes have been looked at again by HMRC.
Our advice is to speak to your tax adviser or accountant about how the changes may affect your business.
New VAT penalty points system
We reported the changes to the VAT penalty system in our recent blog:
rackhamsaccountants.co.uk/2023/01/16/new-vat-penalty-rules-for-every-business
The new system is based on penalty points and is designed to take genuine reasons for a missing or late return as a one-off into account. The penalty points allowance offers the opportunity for redemption with the avoidance of a fine. Most observers seem to agree that the system is fairer, albeit a little more complicated. If you think of it applying in a similar fashion to the way the penalty points system for motoring offences, you’re on the right lines.
If you’ve recently sold, or are planning to sell a rental property…
Many landlords are reviewing their property investment portfolios in view of the higher costs of borrowing and maintaining rental property. If you’re thinking of selling, don’t forget that any profit you make on the sale of a rental property that you own and have let to tenants is liable for capital gains tax (CGT). Also, be aware that any CGT liability has to be paid within 60 days of completion of the sale.
https://www.gov.uk/tax-sell-property
Contact Rackhams to speak to an expert about any of these matters and more on 01482 631700
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