Income Tax (Trading and Other Income) Act 2005 section 326A

Under-used holiday accommodation: letting condition not met

Section 326A provides a period of grace allowing owners of furnished holiday lettings to elect that their property continues to qualify as holiday accommodation for up to two further tax years when the letting condition of 105 days is not met.

• Where a property qualified as holiday accommodation in a previous year but fails to meet the 105-day letting condition in a subsequent year, the owner can elect to treat it as still qualifying, provided there was a genuine intention to meet the letting condition.
• This period of grace election can cover up to two consecutive tax years following the last year in which the property genuinely qualified, but only if the sole reason for failing to qualify is the letting condition not being met.
• The election must be made for the first tax year in which the letting condition is not met — if no election is made for that first year, no election can be made for the second year either.
• A period of grace election cannot be made for the same tax year as an averaging election under section 326, and must be submitted on or before the first anniversary of the normal self-assessment filing date for the relevant tax year.

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