Tax efficiency of holiday accommodation, glamping and incorporation

The spring Budget brings in chancellor Rishi Sunak’s so-called ‘super deduction’ tax relief offering the ability to offset 130% of investment in new plant and equipment in the year the spending occurs for the two years from 1 April 2021 – spending incurred between 1 April 2021 and 31 March 2023. This advantage only applies to companies. Much attention has been placed for example on incorporation of part of the farming operation as a result of this tax advantage together with research and development. There could be a move towards protecting the holiday elements of a farming enterprise in a limited company and trying to use the super deduction advantage.

Plant and machinery

Moveable lodges in a holiday operation will qualify as plant and machinery as long as they meet the conditions described in the following paragraphs.

Guidance is available in HMRC’s Capital Allowances Manual CA29320. Under CAA...