27 August 2015

A recent IHT case concerned whether Business Property Relief for Inheritance Tax was available for a Mrs Green who had five self-catering holiday lets on the north Norfolk coast.

Mrs Green was active in marketing the properties and linen, electricity, kitchen equipment, Wi-Fi and other items were available to guests at no extra charge. A welcome pack was available and a caretaker was available in emergencies. However, the Judge also found that the guests did their own laundry, cooking, washing up (and to some extent cleaning) and would rarely contact the caretaker. She concluded that the guests are left “almost entirely to their own devices once they arrive”.

BPR was disallowed on the basis that the business was mainly of an investment nature (rather than trading).

This case follows that of Pawson in 2013, which concerned a single furnished holiday let where the taxpayer also failed to secure relief. The facts of this case appear different in that there were five units and they were being run in a thoroughly business like way. It remains the case (in theory at least) that if the owner provides lots of extra services over and above what would be expected in a normal property letting business then BPR might be available. However in reality, this case provides further support for the view that for the vast majority of furnished holiday lets (even those with multiple units) BPR is unlikely to be available.

What this means for you

If you have furnished holiday lets and are hoping that Inheritance Tax relief will be available then you should review your position. This case confirms the challenges involved in claiming such relief.

For further information contact Tom Hewitt.

Key contact

Tom Hewitt

Tom Hewitt Partner

  • Private Wealth
  • Head of Estates and Land
  • Head of Food and Farming

Subscribe to news and insight

Burges Salmon careers

We work hard to make sure Burges Salmon is a great place to work.
Find out more