Going on holiday. Counting the days.

A property must pass all three tests: 

• pattern of occupation condition: the total of lets of more than 31 continuous days must not exceed 155 days a year
• availability condition: property must be available for let for at least 210 days in the year (exclude any days you stay there yourself)
• letting condition: property must be let commercially as furnished holiday accommodation to the public for at least 105 days a year. Exclude days let to friends or relatives at zero or reduced rates: and lets more than 31 days (unless the 31 days extend due to unforeseen circumstances, such as a guest becoming ill and unable to leave on time).

For established lets, tests apply to the tax year (for income tax): and to the 12 months of the accounting period (for corporation tax). There are slightly different rules on commencement and cessation.

If your day count to 5 April 2021 falls short of the letting condition, a ‘period of grace election’ could preserve FHL status. But you must still meet the other two tests. The election can be available if you have a genuine, demonstrable, intention to let, but can’t, for example because of cancellations due to unforeseen circumstances. For the year to 5 April 2021, this can include COVID-19 measures like enforced closure due to lockdown or travel ban. If you have more than one FHL, you may be able to use an averaging election to similar effect. We should be delighted to advise further if you have concerns here.