shutterstock_417128692-CMS
Posted on

HMRC have published draft legislation and a policy paper outlining the proposal for the abolition of the furnished holiday lettings (FHL) tax regime. This was originally announced by the previous government, and the current government has confirmed that the legislation will be progressed.

The new measures are proposed to take effect on or after 6 April 2025 for income and capital gains tax, and from 1 April 2025 for corporation tax.

The proposed revisions will remove the tax advantages that furnished holiday let landlords have over other property businesses, as follows:

  1. Loan interest will be restricted to the basic rate for Income Tax.
  2. Capital allowance rules for new expenditure will be removed and replaced with the replacement of domestic items relief available to other property businesses.
  3. Capital gains tax reliefs based on disposing a business asset will no longer apply to furnished holiday lets.
  4. Furnished holiday let income will no longer be included within relevant UK earnings when calculating maximum pension relief.

There are specific transitional rules that will apply to these changes.

If you own properties that currently qualify for the FHL tax regime, we recommend that you review the effects that the change in legislation will have on you so that you can determine if you need to take any action. If you need any help with this, please do not hesitate to contact us, we will be pleased to help you.

See: https://www.gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition

About the Author

Martin Johnson Image

Martin Johnson

Partner
With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.  Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues. A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.  

To get in touch please e-mail martin.johnson@torgersens.com.

Share this story...

More Stories

Animal breeders! HMRC may be in touch

Animal breeders! HMRC may be in touch

A company closes - how to withdraw any remaining cash tax efficiently

A company closes - how to withdraw any remaining cash tax efficiently

Companies House online services to move to GOV.UK One Login

Companies House online services to move to GOV.UK One Login