Changes look to be in the pipeline around the treatment of holiday rental properties and their status with HMRC. Up until 2008 HMRC held holiday lets to be considered businesses and so exempt from inheritance tax. However, the HMRC has now made a successful plea to the High Court persuading the court that a bungalow on the sea in Suffolk was an investment and not a business and should be subject to IHT, set up 40% for estates over £325,000. They argued that in order for properties to be businesses they were required to offer a service to a service. In this case the Lower Court found in favour of the estate of the bungalow following the HMRC’s challenge but then the High Court ruled in favour. Nicolas Pawson, the now owner of the bungalow, plans to take the case to the Court of Appeal. The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Setfords Solicitors are a national full service law firm, with inheritance tax and private client specialist solicitors in Felixstowe, Suffolk and across the country.