Building a cabin to accommodate woodland course participants

EAP

Hi everyone,
It's been a while since I finished my studies and I've been asked a question I'm not sure I can answer - hope someone here can! My brother runs woodland courses in his woods (he lives there and runs a charcoal business), this year he's building a cabin to provide accommodation for those who want to stay over. It's cost 8k in building materials so far and I've told him I don't think he can claim capital allowances or even taxable expenses as it would count as a holiday let. Am I wrong? Has anyone else dealt with anything similar?

RyanMIP

Claim it all under AIA

south59

I'm starting to form the opinion that this section of the forum should be password protected. Some answers, not questions - form many laughs elsewhere.

How can you seem so confident, yet be so wrong?

What is this? A sabotage mission?

I'm all for getting answers wrong, nobody is perfect - yet it is posted in a way which looks like a matter of fact.

Dear me.

RyanMIP

Quite right, but 'mrme89' doesn't seem to get the message.

south59

My comment wasn't directed to mrme89.

RyanMIP

Right. It's capital expenditure under the 200k limit?? I saw a case like this about a year ago.

south59

Oh come on - what's your issue with the AAT?

Gem7321

Capital allowances and deductible expenses are available on Furnished Holiday Lets subject to the normal rules - that's what makes them attractive. AIA will be available on Plant and Machinery (ie. integral features); not the whole lot!

And to broaden the scope even more, I think you could potentially have a claim to BPR for IHT purposes as you could argue that the accommodation is incidental to the trade (the woodland course).

EAP

Sorry Gem7321, just to clarify, can he claim deductible expenses or capital allowances on the building materials? I understood the integral features were electrics, cold water system, water heating and solar. This does account for some of the spend but not the 8k on building materials.
Thank you so much for your help so far.

MarieNoelle

First you need to look at whether the holiday let qualifies as FHL. There are strict conditions on availability, actual days let and pattern. Once you have ascertained this you need to look at what counts as revenue expenditure and capital expenditure. If a FHL not all capital expenditure will qualify for capital allowances.
HMRC publishes a comprehensive agent checklist for property rental (I will post a link when I find it!)

RyanMIP

Why are we getting hung-up on the FHL point? If he "runs woodland courses" is there not already a trade for CA purposes??

Ryan

EAP

Ryan - what does it need to qualify as part of the trade - and what if he also rents it out when there are no courses being held?

Gem7321

Ryan are you forgetting the plant and machinery rule? Since when does property qualify as plant and machinery?

Sorry @EAP I didn't realise you were referring to 'deductible expenses' as expenses only incurred on the building work. As @MarieNoelle has said you will need to ascertain which are capital and which are revenue, as it's a new build you'll have great difficulty claiming any as revenue expenses. Integral features and Plant and Machinery qualify for CA's in a FHL the same as in any other trade.

EAP

Thanks @mrme89 that's sort of what I thought. You are absolutely right (and you put it very tactfully) - I'm out of my depth here. I've told my brother - twice - that he needs to get professional advice. Hopefully I can make it sound complex enough that he'll take heed! I'm not involved in preparation of accounts at all at present. It was all so simple when he just made charcoal and sold it!
Thanks everyone for all your help.