Furnished holiday letting business is not a business for IHT relief
A furnished holiday letting business is treated as a trade for most tax purposes. For example, capital allowances are available on furniture, and CGT entrepreneurs' relief is available on disposal of the business.
However, a recent tax case has determined that a holiday letting business in Cornwall did not qualify for inheritance tax business property relief.
Despite the provision of a range of services to customers, the judge agreed with HMRC that the business was wholly or mainly that
of making or holding of investments and as such ineligible for any relief from inheritance tax.
Note that the restricted deduction for interest that started to apply to buy-to-let businesses from 6 April 2017 does not apply to furnished holiday lets.
There are special rules for a rental business to qualify as furnished holiday lettings, in particular the property must be available for letting for 210 days a year, and actually let for 105 days.