Delve into the various financial support schemes available to UK holiday let owners
Charlotte Beautement, Holiday Let Content Writer
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 couple of years, what help remains for those businesses that are still struggling?
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.
Short answer, yes, there is still help available for businesses. 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.
The Government and the British Business Bank announced that a new phase of the Recovery Loan Scheme (RLS) will operate from August 2022 until June 2024. The initial scheme was launched in April 2021 to help support businesses after the coronavirus pandemic, with the current pressures of rising costs, the scheme has been extended for a further two years.
The scheme makes available:
Up to £2 million per business group finance available
In Northern Ireland, up to £1 million will be available
Guaranteed coverage from the UK Government will be capped at 70%
The Recovery Loan Scheme should only be offered by lenders if if they are unable to offer a facility on better terms without the guarantee.
Please note: All terms and amounts offered are at each participating lenders discretion.
The Recovery Loan Scheme was initially launched to replace the Bounce Back Loan Scheme. The current scheme is designed to support eligible UK businesses to survive, recover and grow, to aid the UK economic recovery following the Coronavirus pandemic.
Any UK business not subjected to the Northern Ireland Protocol can apply for a Phase 3 Recovery Loan Scheme of between £25,001 and £2,000,000.
UK businesses subjected to the Northern Ireland Protocol can apply for a Recovery Loan Scheme Phase 3 loan between £25,001 and £1,000,000, both are subjected to, eligibility and viability assessments and previous relevant subsidy amounts received by you or any member of your group.
On the British Business Bank’s website you can find a list of accredited lenders that offer loans for the new recovery loan scheme.
To be eligible for the Recover Loan Scheme, your business must be:
Be trading in the UK
Business has a turnover of £45 million or less
Would be operable were it not for the pandemic
Is not in collective insolvency proceedings
Has been impacted by the pandemic
Plus, you must show your business is viable and not in difficulty. 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.
You may still be able to apply for a Recovery Loan Scheme even if you have taken out previous loans, such as the Bounce Back Loan, Coronavirus Large Business Interruption Loan and Coronavirus Business Interruption Loan. You may see the amount you can borrow reduced if you have used previous loan schemes.
Phase 3 of the Recovery Loan Scheme will run from August 2022 until June 2024
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.
Please be aware: The Recovery Loan Scheme is not a grant, your business is responsible for repaying 100% of the loan. The government guarantee doesn’t reduce your liability for the whole loan amount. You can find more information on the Recovery Loan Scheme from the British Business Bank website.
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)
Has been impacted by the pandemic
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.
Businesses in the industries of banks, building societies, insurers and re-insurers (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.
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 for tax purposes. 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 a Sykes Holiday Cottages owner, you may be entitled to claim specialist tax relief on the embedded fixtures when you bought, built, or refurbished your holiday let, see how Zeal Tax may be able to assist.
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. Please note, there is no period of grace election for business rates occupancy and letting days.
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 or undertaking refurbishment works to the property.
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.
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.
The new business rates relief scheme for retail, hospitality and leisure properties in 2023/24 was announced by The Chancellor in the 2022 Autumn statement, set to be worth around £2.1 billion.
As stated on the GOV.UK site, ‘The 2023/24 Retail, Hospitality and Leisure Business Rates Relief scheme will provide eligible, occupied, retail, hospitality and leisure properties with a 75% relief, with a cash cap limit of £110,000 per business’.
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 guest house, a hotel 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.
As this is a temporary measure for the 2023/24 tax year, the legislation relating to reliefs being made available is not being changed by the Government. They will reimburse local authorities that use their discretionary relief powers to grant relief, in line with the eligibility criteria set out in the guidance, under the Local Government Finance Act 1988, section 47.
It will be for the local authorities to determine each individual case, to grant relief under section 47. If you so qualify for Business Rates Relief, check with your local council on the next steps.
For more information on relief in Wales, click here.
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. Here is the list of schemes that are no longer available:
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.
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.
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.
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.
Note: This has now been replaced by the New Recovery Loan Scheme.
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.
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.
If you're thinking of buying a holiday let or just need some advice, our property experts can help answer any queries you may have.
* At the time of updating (May 2023), 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. * The service is provided as an additional benefit to our owners by Added Value, which helps us monitor suppliers’ standards, feedback and communication, and support both our owners and suppliers. Any services provided is on a third-party basis from Sykes, so any contract is between the supplier and the owner directly.
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Sykes Cottages
One City Place, Chester, Cheshire, CH1 38Q, United Kingdom
Registration No: 4469189
VAT Registration No: 204 9794 88
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