Nottingham and Chilwell-based chartered accountancy firm, UHY Hacker Young, is warning holiday property owners that they could be hit with tax restrictions in the New Year.

The advice follows the HMRC consultation period over plans to tighten the qualifying conditions for furnished holiday lettings and end tax privileges for owners. If agreed upon, the new conditions are expected to come into place on April 6, 2011.

As part of the planned criteria restrictions, the number of days per year that a property must be available for commercial let will be increased from 140 to 210. In addition, the property will have to be occupied for a minimum of 105 days per year, a planned increase of 35 days.

Holiday properties are also currently entitled to a privileged loss relief status, which UHY Hacker Young is warning could also be removed. Owners of furnished holiday lettings can currently offset any loses arising from the letting of a property against their general income, but this could change after 6 April if the proposed changes go ahead.

Despite the previous Government's decision to remove the favourable regulations for furnished holiday lettings on April 6, 2010, they were re-instated by the Coalition in the Emergency Budget earlier this year.

Jeff Parr, taxation partner at UHY Hacker Young commented: "Many holiday property owners were extremely pleased to see that their tax status had been extended in the Emergency Budget, but the forthcoming announcement looks set to remove these privileges once and for all.

"Now may be the time to act, particularly if owners are considering selling their property, as they will be eligible for Entrepreneurs Relief if they sell before April 6."

Entrepreneur's Relief currently applies to furnished holiday lettings, but not to other letting businesses and could also be removed if the new regulations are imposed.