If you let more than one property as a FHL, and one or more of these properties does not meet the letting condition of 105 days, you can elect to apply the letting condition to the average rate of occupancy for all the properties you let as FHLs. This is called an averaging election. Example Emma lets 4 UK holiday cottages in 2019 to 2020 for the following number of days:
CottageNumber of days Cottage 1120 days Cottage 2125 days Cottage 3112 days Cottage 464 days Total421 days If Emma uses averaging, all 4 cottages will meet the letting condition (421 days divided by 4 = 105). Without averaging, cottage 4 would not qualify. You can only average across properties in a single FHL business. You cannot mix UK and EEA FHL properties together. Time limit You make an averaging election up to one year after 31 January following the end of the tax year. For example, if you’re filling in your tax return for 2019 to 2020, you must make your election by 31 January 2022.