Majority of UK adults are unaware of holiday let tax breaks, reveals Hodge study

Eight out of 10 people admit that they don’t know or aren’t sure about the financial benefits involved in owning a holiday let, according to the latest study from Hodge.

The survey, conducted in June this year, polled 1,000 adults aged over 50.

Current guidelines state owners of a holiday let or portfolio of property lets can deduct the cost of a mortgage from any profits before calculating income tax, alongside expenses including council tax, utilities, maintenance, cleaning and property management costs, and advertising.   

A property must be classified by HMRC as a furnished holiday let to qualify for the tax relief.

Hodge data also revealed that over half of respondents (52%) are not willing to invest in a holiday let, with the perceived ‘hassle’ of taking one on quoted as the biggest reason holding them back.

The other five top reasons listed by those not willing to consider a holiday let, include:

  • they don’t think their finances would allow it (48%)
  • they don’t want to go to the same place every time (41%)
  • they feel too old to do it now (35%)
  • they’d worry about visitors breaking things (24%)
  • they’d worry about their finances if empty for too long (21.53%)

Only 30% of those questioned by Hodge said they would consider investing in a holiday let property, with the remaining 18% saying they were unsure.

Emma Graham, business development director at Hodge, said: “These figures are quite concerning in many ways, at a time when people are seeking alternative ways to make the most of any capital they have.

“What’s really frustrating about these findings is that such an overwhelming majority of those we asked weren’t even aware that there are tax breaks involved which could, in effect, create gains difficult to achieve elsewhere in the market.

“To think so many people in the UK are missing out on tax breaks because they don’t know about them means thousands could be missing out on financial gains at a time when many have arguably never needed them more. 

“This just shows the benefits of people using expert mortgage brokers or financial advisers, as they will be able to explain the tax benefits of owning a holiday let, as well as helping customers navigate the different products on the market.”

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