Abolishment of Furnished holiday lettings tax regime confirmed
HM Revenue and Customs (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 any hopes that this may be stalled by the new government are now laid to rest.
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:
- Loan interest will be restricted to the basic rate for Income Tax.
- Capital allowance rules for new expenditure will be removed and replaced with the replacement of domestic items relief available to other property businesses.
- Capital gains tax reliefs based on disposing a business asset will no longer apply to furnished holiday lets.
- Furnished holiday let income will no longer be included within relevant UK earnings when calculating maximum pension relief.
There are some 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 would be pleased to help you.
See:
The Plan 1 student loan interest rate reduced to 6% (from 6.25%) from 30 August. This rate change applies across the UK with the Department for Education (DfE), the Welsh Government and the Department for the Economy in Northern Ireland (DfE NI) all confirming the change.
Barratt Developments, the UK's largest housebuilder, has reported a significant decline in pre-tax profits, down by three-quarters for the year ending June 2024. This comes as the company completed just 14,000 homes, a sharp decrease from 17,000 the previous year, with forecasts suggesting even lower figures of 13,000 to 13,500 homes for the upcoming year.
