PTAX Personal Tax - Furnished Holiday Lettings

Charlay Registered Posts: 16 Regular contributor ⭐ 😼 ⭐

Going through the advantages of the Furnished Holiday Lettings, the main one is:

"profits count as earnings for pension purposes".

I'm not sure why this is an advantage?

I know that for the assessment I probably only need to be able to parrot the above phrase, or tick the right multiple choice box, but I'd much rather have a genuine understanding as to why that is an advantage and my text doesn't explain, nor do any of the HMRC web pages that I've looked at.

I thought income from pensions was taxed in the 'Non-savings' bracket, so is it something to do with NIC, or something else? What have I missed?



  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Hi Charlay

    Each tax year an individual is entitled to make contributions to a pension scheme and receive maximum relief on 100% of their taxable earnings (capped at the annual allowance of £40,000).

    FHL profits count as taxable earnings i.e they are added to employment and trade income to give the maximum amount on which you will get pension relief.

    Does it make it clearer?

    P.S: I too used to get frustrated sometimes with AAT for not providing more details (or at least give a clue of where we may find them!).
  • Charlay
    Charlay Registered Posts: 16 Regular contributor ⭐ 😼 ⭐
    I think I get it; so any income they receive from FHL will increase the amount of pensions contributions that they can receive 100% tax relief on. Whereas, I suppose there are other incomes that are not classed as earnings for pension purposes and they do not increase that upper limit where a taxpayer will receive 100% tax relief on pensions contributions.

    Seems like that is more complex than the kind of content that they want in the PTAX module, especially with it being only 60 hours recommended study time. Just a bit clumsy sometimes how they have to cut it off when your curiosity takes you further.

    Thanks for taking the time to clear that up for me, my OCD is appeased and I can sleep soundly tonight!
  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    Your comments made me smile!

    As you say, for example normal rental income (non FHL) wouldn't come into the calculations of taxable earnings.
  • Richard2013
    Richard2013 Registered Posts: 23 Regular contributor ⭐ 😼 ⭐
    I'm also doing ptax atm.we're taught and told a lot about what we need to know an what is not required at L4. It makes me feel like an idiot. We learn quite a lot, yet there is an ocean of knowledge outside the syllabus that we as bookkeepers/"accountants" ought to know.
  • Charlay
    Charlay Registered Posts: 16 Regular contributor ⭐ 😼 ⭐
    I know what mean Richard. To me it looks like a box-ticking exercise; to get enough hours of required learning onto the course to make it up to L4 diploma standard, to give the course a bit of variety and the students a taste of what the area of tax is like. But there's nowhere near enough for it to be practical in the workplace and I don't think the AAT qualification allows for full members to decalre themselves tax practitioners.

    Whereas with stuff like Financial Statements, I feel like I'm learning useful knowledge that means I can draft accounts, there isn't that feeling with PTAX/BTAX so that motivation to learn isn't there. It's frustrating.
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