Annex 1: Minor Changes in the Law Change 51: Property income: furnished holiday accommodation: permitted longer-term occupation: section 267
This change alters the period during which, in order to qualify for the special tax treatment of the commercial letting of furnished holiday accommodation, the accommodation must not be occupied for more than 31 days at a time.
It brings the income and corporation tax codes back into line.
Section 504(3) of ICTA provides:
It is not clear whether a “month” for the purposes of paragraph (c) means a calendar month (in the sense of January, February, etc) or any period of one month. It is also not clear whether any breaks in the period of at least seven months can fall at any time or must divide the period into periods of whole months. The better view seems to be that any period of a month during which the accommodation is commercially let to members of the public as holiday accommodation must not overlap with any period during which it is continuously in the same occupation for more than 31 days.
A further uncertainty is whether, for the purposes of paragraph (c), the time that the accommodation is “let as mentioned in paragraph (b)” is 70 days or (which is the better view) all the time that it is commercially let to the public generally as holiday accommodation.
On the latter reading, section 504(3)(c) of ICTA secures that accommodation is not let as holiday accommodation if it is let for more than 31 days continuously (otherwise than because of circumstances that are not normal). Section 267(4) gives effect to this reading.
This reading also reduces to less than five months the total periods during which the accommodation can be in the same occupation for more than 31 days. This can operate capriciously to extend the period of “at least seven months” where the holiday lettings are spaced out throughout the relevant period (see section 266) and not concentrated in a few months.
In section 267(5), the requirement in section 504(3)(c) of ICTA is relaxed so that the periods for which the accommodation is continuously in the same occupation for more than 31 days must not amount to more than 155 days (the aggregate length of the five longest months) during the relevant period. This means that the period during which any occupation of the accommodation must be on a short-term basis:
	need not be composed of whole months but can be made up of non-consecutive days; and
	is never extended beyond 155 days.
So, where two or three days of a holiday letting fall in a particular month, the requirement in section 267(5) of this Act (unlike section 504(3)(c) of ICTA) does not restrict what can be done with the accommodation during the rest of the month (provided that the condition is satisfied over the relevant period as a whole).
This change is in taxpayers’ favour in principle and may benefit some in practice. But the numbers affected and the amounts involved are likely to be small.