Election to average occupation of FHLs

If you let a property as furnished holiday accommodation it qualifies for preferential tax treatment if various conditions are met. One condition requires that the property is let for a minimum number of days each year. If you let two or more such properties and one or more fails this test, an averaging election can be used to retain the furnished holiday letting (FHL) status.

When can you use the election?

To count as a FHL the property must, during a twelve-month period:

• have been available for letting to the public for 210 days
• actually be let for at least 105 days; and
• not have been let for long-term periods exceeding 155 days. To work this out you need to add together any periods where the property was occupied by the same tenant for more than 31 consecutive days. But you can exclude from this any periods you occupy the property. This means you can occupy it during the winter months without jeopardising your relief.

Where you own two or more FHLs but one of them does not meet the conditions, you can make an election so that the occupation of all properties is averaged. If the average occupation meets the conditions then all properties will count as qualifying for the preferential tax treatment.

How to make the election

The election can be made in a letter or included in the additional information space of your self-assessment tax return. You can also make an election by sending it in writing. In either case your election must reach HMRC no later than one year from the 31 January following the end of the tax year for which it is to apply, e.g. if you want the averaging election to apply to 2022/23 it must reach HMRC by 31 January 2025.