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Ruling gives tax relief on holiday lettings.

THE recent First Tier Tribunal decision in Pawson versus Inland Revenue Commissioners granted inheritance tax business property relief to an interest in a property used for holiday lettings.

Representatives of Nicolette Pawson, who died in 2006, appealed against a determination that her 25 per cent share in a holiday property was subject to inheritance tax.

The outcome was a victory for the taxpayer but clearly shows that clarification is much needed on the taxation of holiday lettings. The case revolved around whether or not the letting of a holiday cottage consisted wholly or mainly of holding an investment.

Property comprising a business or an interest in a business carried on for gain and consisting of something other than the making or holding of investments ('relevant business property') is entitled to relief from inheritance tax.

HMRC had determined in 2008 that the holiday property was subject to inheritance tax. The taxpayer appealed to the Tax Chamber of the First-Tier Tribunal, claiming that the property was entitled to relief as a 'relevant business property'.
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Title Annotation:Features
Publication:Coventry Evening Telegraph (England)
Date:Feb 27, 2012
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