Tax advice of the week: holiday lets to lose tax break

The current tax rules on holiday lets being treated as a business are not compliant with European law and will soon be scrapped. But you can still maximise your tax relief.

For years, the taxman has treated UK furnished holiday lets as a business, so any losses can be used to reduce the tax on other income. It turns out, however, that the current rules are not compliant with European law and therefore, as the small print in Alistair Darling's last Budget reveals, the "special tax treatment" will end on 5 April 2010.

This tax concession doesn't just relate to losses, says Myra Butterworth in The Daily Telegraph there are other tax breaks available to reduce inheritance and capital-gains tax, which will also be withdrawn.

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