Inheritance Tax relief and holiday homes
UK holiday home owners were dealt a bitter blow recently, after a specific court case was heard, which found that a specific holiday bungalow was in fact considered to be an investment – a ruling which meant that the owners would not in fact quality for inheritance tax relief.
Those holiday homes which are likely to be considered an investment are those which are operated as a business, or are let out to other individuals periodically, for a fee. This includes ordinary homes and outbuildings.
The ruling, which is thought to affect around 60,000 people in the UK, came about when a family disputed HMRC’s decision that their holiday home, in which they all had a share, was in fact an investment. Because the services offered to customers were limited in contrast to a hotel, HMRC argued, it could not be classed as a business.