Furnished holiday lettings – changes effective 6th April 2025
April 3, 2024
In the recent Spring Budget, the Chancellor announced that the current favourable tax treatment of furnished holiday lettings would be abolished. These changes will come into effect on 6th April 2025.
Beneficial tax treatment of furnished holiday lettings to be abolished
As announced in the 2024 Budget, the beneficial tax treatment of furnished holiday lettings (FHLs) will be abolished from 6 April 2025, when the business will start being taxed in the same way as other residential property businesses.
Owners of properties that currently qualify as FHL might wish to consider increasing their expenditure on equipment such as furniture and televisions whilst the 100% annual investment allowance (AIA) continues to be available. The current capital gains tax reliefs, particularly business asset disposal relief (BADR) will also cease from 6 April 2025, so owners might consider selling their holiday letting property whilst the 10% CGT rate continues to apply to the disposal.
Note that where several FHL properties are owned they would all need to be disposed of before 6 April 2025 for BADR to apply. BADR would generally not apply where a single asset is disposed of out of a larger business.
Talk to the RA Accountants’ team
If you would like to talk to our team of tax specialists about the changes in the tax treatment of furnished holiday lettings, please do get in touch. We would be very pleased to hear from you.
If you own a number of properties, why not contact the RA team to arrange a full tax review, that takes into account your long term financial goals? This could include inheritance tax, trusts and other issues.
Find out more
Read page 13 in RA Accountants’ 2024 Budget Summary
Gov.uk: Annual Investment Allowance
Gov.uk: Business Asset Disposal Relief (BADR)
This article is for guidance only and professional advice should be obtained before acting on any information contained in them. No responsibility can be accepted for loss occasioned howsoever to any person as a result of action taken or refrained from as a result of reading.
