Hmrc Holiday Homes
Government financial support for UK holiday let owners has been a lifeline for many businesses that were hit hard by the COVID-19 pandemic. Among many other things, COVID-19 has had a significantly adverse effect on the self-catering holiday let industry with people being unable to travel and properties forced to close their doors. This put feelings of worry and panic into the minds of holiday let owners and many other industries, who missed out on valuable income to keep their businesses running.
During this time of crisis, holiday let owners were offered government financial support in the form of loans and deferred payments to help their businesses survive. Although this has been a well-needed helping hand over the last 18 months, what help remains for those businesses that are still struggling? With the autumn 2021 budget announcement on the 27th October, there have been some changes that may impact you as UK holiday let owner.
If you're unsure where you stand with recent changes you can read our fully updated guide to government financial support for UK holiday let owners, or select from our quick links below to find out what help is still available.
Tax Deferral Scheme
Business Rates Relief
Coronavirus Business Interruption Loan Scheme
Coronavirus Bounce Back Loan Scheme
Period of Grace Elections
Small Business Grant Fund
Self-employed Income Support Scheme (SEISS)
New Recovery Loan Scheme
Financial Support for UK Holiday Let Owners Update: Autumn 2021
On the 27th October 2021, Rishi Sunak published the autumn budget. This included an outline of the support that will be offered to businesses that are still trying to get back on their feet since the start of the COVID-19 pandemic. Since March 2020 there have been multiple support schemes available to property owners in the form of loans and deferral of payments for areas such as tax and VAT. As the restrictions slowly lifted, many of the various support schemes have been withdrawn.
Since all the restrictions for travel in England, Scotland, Northern Ireland and Wales were lifted fully in July 2021, UK holiday let owners have enjoyed a boom in business. With travel abroad still restricted, many people opted for a UK holiday which has been great news for our owners who were able to welcome guests again. Although this has been a very welcome and exciting time for our owners, not all small businesses have found it easy to get back up and running. For those who are still struggling, there is still help available. Lets take a look at what financial support for UK holiday let owners is still being offered.
Is There Any Financial Support for UK Holiday Let Owners Still Available?
Yes, there is still help available for businesses that are struggling to get back up and running. Below we'll take a look at what the government is doing to help those who are still in need of support and what government financial support for UK holiday let owners is still available.
New Recovery Loan Scheme
The new recovery loan scheme was launched to replace the existing Bounce Back Loan Scheme.
Previously open to businesses of any size, the new recovery loan scheme provides support to businesses by helping them access finance options including loans to help them transition through the lifting of restrictions. The maximum amount available per business was £10 million when the scheme was first introduced. 80% of the loan was guaranteed by the government. Some significant changes were announced by the chancellor in the autumn 2021 budget:
New Recovery Loan Scheme From 1 January 2022 Onwards
The Chancellor announced that as part of the autumn budget 2021, that the Recovery Loan Scheme would be extended. This extension will last until 30 June 2022.
The following changes come into force from the 1st January 2022:
- The amount of finance available will be limited to £2,000,000
- Only small and medium sized businesses will be eligible to apply
- Guaranteed coverage from the government will be capped at 70%
These changes will apply to all offers made from 1 January 2022.
How to apply for the New Recovery Loan Scheme
On the British Business Bank's website you can find a list of accredited lenders that offer loans for the new recovery loan scheme.
Are you eligible for the new recovery loan scheme?
You need to demonstrate that your business:
- would be operable were it not for the pandemic
- is not in collective insolvency proceedings (unless your business is in scope of the Northern Ireland Protocol in which case different eligibility rules may apply)
- has been impacted by the pandemic
You need the following credentials to apply:
- Your business must be trading in the UK
Note: If businesses meet all other eligibility criteria, businesses that were supported by COVID-19 guaranteed loan schemes are still eligible to apply for finance under this scheme.
What are the exemptions for the new recovery loan scheme?
Businesses in the industries of banks, building societies, insurers and reinsurers (but not insurance brokers), public-sector bodies, state-funded primary and secondary schools are not eligible to apply.
Note: Lenders are free to determine the amount and terms of the loan. The borrower is always 100% liable for the loan.
Period of Grace Elections 
What is a Period of Grace Election?
If your Furnished Holiday Let (FHL) does not reach a certain level of availability or occupancy throughout the year, then it can no longer be classed as a FHL.
However, if you were genuinely intending to meet the letting thresholds and the reasons for not doing so were out of your control, then a Period of Grace Election may be able to help your property continue to qualify as a FHL while you get back up and running.
If you are worried about your property still qualifying as a Furnished Holiday Let in the aftermath of COVID-19, a Period of Grace may be able to help you out.
How do Period of Grace Elections work?
You are eligible to make a Period of Grace Election as long as your property met the required occupation and availability levels in the previous year.
You must also prove that, despite not meeting the conditions, you were genuinely intent on doing so. This can be shown by your marketing levels being at least the same, if not greater than the years that you reached the occupancy and availability thresholds.
You may also be eligible to make a Period of Grace Election if your bookings have been cancelled due to unforeseen circumstances, such as COVID-19.
What happens if you don't meet the letting conditions during your Period of Grace?
If your property does not reach the requested letting conditions while in a first Period of Grace, you are able to make another election. This option is only available if you made a Period of Grace Election in the year prior.
If your property was to fall short of the letting requirements for a 3rd year running, you are unable to make another election and your property will no longer qualify as being a Furnished Holiday Let.
You can read more about Period of Grace elections here.
Business Rates Relief
If you are already set up as holiday let business, you'll be aware that business rates are charged on most non-domestic properties like shops, pubs and holiday rental homes or guest houses. During the COVID-19 crisis, financial support was offered by freezing these payments for businesses that were not able to welcome customers.
A business rate holiday was introduced for companies in the retail, hospitality and leisure industries in England to help them recover their financial situation following COVID-19. Businesses in these sectors that are based in England only were not required to pay business rates throughout 2020 and 2021.
In the autumn 2021 budget, the chancellor Rishi Sunak announced that a 50% business rates discount for the retail, hospitality and leisure sectors for 12 months, which will give a maximum of £110,000 tax cut for small businesses.
Which properties are eligible for Business Rates Relief?
You can benefit from business rate holiday if your property falls into one of the following business industries:
- Restaurant/café/bar/pub
- Shop
- Music venue/cinema
- Leisure (sports club, gym, spa etc.)
- Hospitality property (E.g. a hotel, a guest house or self-catering accommodation)
Note: if you are an owner whose property qualifies as a Furnished Holiday Let, you may already be benefitting from the small business rates relief scheme, in which case this scheme will not be applicable to you.
How do you apply for a Business Rate Holiday?
If you qualify for Business Rates Relief, this will be automatically processed by your local council.
Use the government website's business rate calculator to work out how much money your Business Rate Holiday will save you.
Note: The planned multiplier increase will be cancelled for 2022. You can read about this and business rates relief in detail here.
What Financial Support for UK Holiday Let Owners Has Been Withdrawn?
Back in March 2020, the first schemes aimed at supporting UK holiday let owners financially were put in place, but since the restrictions have lifted, many businesses have not just survived but also thrived from the help they have been given. Many of the initial support options have now been withdrawn and can no longer be applied for. Below, we have gathered the full list of support that is no longer being offered by the government.
Tax Deferral Scheme – No longer available
What is the Tax Deferral Scheme?
The Tax Deferral Scheme was introduced by the government to allow VAT-registered businesses to delay some VAT/income tax payments from the 2019/20 tax year to 2021. Businesses that are VAT-registered were able to defer both VAT and income tax payments, if they required some cash flow relief as a result of the Coronavirus pandemic.
Income Tax Payment Deferral – Now Closed
To help relieve cash flow in difficult times, temporary delays were offered for tax payments. The deadlines for these payments are usually the 31st of January and 31st of July each year, however the tax deferral scheme allowed you to delay your second payment of the year until the 31st January 2021.
Note: This deferral is no longer offered and guidance for this was withdrawn by the government on 6th July 2021. Anyone who struggled to make their payments were offered the option to set up a Time to Pay installment arrangement. If you have any concerns about your tax reduction or deferrals then you will need to contact HMRC directly for further assistance.
VAT Payment Deferral – Now Closed
The government also offered the opportunity for VAT-registered businesses to delay any VAT payments originally scheduled to be paid in between 20th March and 20th June 2020 to be deferred until no later than 31 March 2021. If you were unable to pay in full by March 2021, then you were given the following options:
- join the online VAT new payment scheme – this had to be done before the 21st June 2021 and it would allow you to spread your payments over smaller, interest free installments
- make arrangements to pay before the 30th June 2021 by contacting HMRC
Note: A 5% charge or penalty interest may have been be applied if you failed to make arrangements for full payment before the 30th June 2021.
Coronavirus Business Interruption Loan Scheme – No longer available
What is the Coronavirus Business Interruption Loan Scheme?
CBILS for short, the Coronavirus Business Interruption Loan Scheme was introduced by the government in order to try and help smaller businesses suffering in light of the coronavirus pandemic by offering loans up to £5million.
80% of the financial support was guaranteed by the government to the lender, and they also payed the interest and any others fees for the first year.
How long does the CBILS loan last?
There were multiple finance options that you could apply for within the Coronavirus Business Interruption Loan Scheme, whichever option that you took, determined how long the loan was for.
Finance for overdrafts and invoices can last up to 3 years, whereas loans and asset finance support has a maximum length of 6 years.
Which businesses are eligible for the Coronavirus Business Interruption Loan Scheme
You were eligible to apply for the CBILS if your business is within the UK and received an annual turnover of up to £45million.
You had to provide proof that your business would have functioned normally if the pandemic didn't happen.
If you were looking to lend £30,000 or more off the government as part of the Coronavirus Business Interruption Loan Scheme, then you would need to verify that your business was not labelled as a 'business in difficulty' on December 31st 2019.
Which businesses cannot apply for the CBILS?
You were not eligible for the Coronavirus Business Interruption Loan Scheme if your business was a:
- Bank, insurer or re-insurer (Insurance brokers are eligible for CBILS)
- Public-sector service
- State primary or secondary school
How do you apply for the Coronavirus Business Interruption Loan Scheme?
Applications closed on March 31st 2021, so you can no longer apply for the Coronavirus Business Interruption Loan Scheme.
Coronavirus Bounce Back Loan Scheme – No longer available
Note: This has now been replaced by the New Recovery Loan Scheme.
What is the CBBLS?
The Bounce Back Loan Scheme (BBLS) was introduced to try and offer businesses smaller in size a quick-fire recovery after being negatively impacted by the COVID-19 pandemic.
If you were eligible for the Coronavirus Bounce Back Loan Scheme, you would be entitled to lend an amount from £2,000 up to the value of 25% of your turnover, with the maximum loan being £50,000.
When does the CBBL need to be repaid?
This loan lasts for up to 6 years, and you are not required to pay anything for the first year, including interest. However after 12 months, 2.5% per year in interest must be paid.
Who was eligible to apply for the Coronavirus Bounce Back Loan Scheme?
You would be eligible to apply for the CBBL Scheme if your business matched the following criteria:
- UK-based
- Existed prior to March 1st 2020
- Was affected negatively due to COVID-19
Can you apply for the Coronavirus Bounce Back Loan Scheme if you are already claiming funding?
There are some already existing government schemes which, if you were already claiming from, you would be ineligible to receive Coronavirus Bounce Back Loan funding. These schemes are:
- COVID-19 Corporate Financing Facility
- Coronavirus Business Interruption Loan Scheme (CBILS)
- Coronavirus Large Business Interruption Loan Scheme (CLBILS)
How do you apply for the Coronavirus Bounce Back Loan Scheme?
This scheme closed on March 31st 2021, so you can no longer apply for the Coronavirus Bounce Back Scheme.
Small Business Grant Fund – No longer available 
What is the Small Business Grant Fund
The Small Business Grant Fund (SBGF) was put into place in April 2020 to assist small and rural English businesses with their running costs throughout the pandemic.
The SBGF scheme offered a £10,000 grant to businesses that are based in England and don't pay many business rates, if any at all.
Who is eligible for the SBGF?
The criteria for businesses that could receive the Small Business Grant Fund were:
- England-based
- Business includes property
- Business was already eligible for the Small Business Rate Relief or Rural Rate Relief on 11th March 2020, or already receives tapered relief
- If not applicable to the above, businesses can be eligible for the SBGF if their premises' rateable value lies in between £12,000 and £15,000
Note that if your business occupies more than 1 building and is eligible for a Small Business Grant Fund, you may claim 1 grant per property.
Who is not eligible for the Small Business Grant Fund?
You are not eligible for funding from the SBGF if:
- If your occupied properties are being used for personal reasons
- You are looking for funding for car parks/parking spaces
- If your business dissolved or was in liquidation on or prior to March 11th 2020
How do you apply for the Small Business Grant Fund?
The Small Business Grant Fund is now closed with all grants being paid out by the 30 September 2020.
Self-employed Income Support Scheme (SEISS) – No longer available 
What is the Self-employed Income Support Scheme?
The SEISS is a grant scheme that was put in place to aid the self-employed businesses that have experienced a negative impact following the COVID-19 pandemic.
This scheme was initially offering a one-off grant, which is no longer available to apply for from14th July 2020. However, the government have decided to extend the funding and allow self-employed businesses to apply for a second grant which is available to claim for from 17th August 2020 to 19th October 2020.
Although this grant does not require any repayments, you will need to pay the relevant Income Tax and self-employed National Insurance fees.
Grants that are issued under this scheme are not classed as 'access to public funds', you are also able to claim these funds on any work visa category.
How much can you get from a SEISS grant?
The second Self-employed Income Support Scheme allows you to claim a grant which equates to 70% of your average profits per month, and pays out 3 months' worth of these profits in one payment. The most that you can claim from the SEISS grant is £6,570. When you are making your claim, you will be told how your grant amount was calculated.
Note that even if you did not claim from the first grant, you are still able to claim from the second if you are eligible.
Who isn't eligible to claim from the Self-employed Income Support Scheme?
You cannot claim from the SEISS if:
- Your business does not apply to one or more of the criteria stated above
- Your business trades through a trust or a limited company
How to claim for SEISS
Claims for the fifth SEISS grant have now closed with the last date for claims being 30 September 2021.
* At the time of updating (29th October 2021), Sykes Cottages has taken all reasonable care to ensure that the information contained in this article is accurate. However, no warranty or representation is given that the information is complete or free from errors or inaccuracies. Generic information is contained within this article and each individual's tax affairs are different, further advice should be sought from an accountant.
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Source: https://www.sykescottages.co.uk/blog/financial-support-holiday-let-owners/
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