In the Spring 2024 budget it was announced that the furnished holiday lettings (FHL) tax regime will be abolished. This is to remove the tax advantage for landlords who let short term furnished holiday properties (compared to those who let out residential properties to long term tenants). Those operating furnished holiday lets as part of their business will be significantly impacted.
Whilst no legislation has be published yet, we can expect that by removing the FHL tax regime:
There has been a suggested “brightline” test to provide tax relief where property letting subject to income tax would qualify as trade. Factors such as; minimum number of properties, no personal use of let and letting on a short-term basis would be considered.
If you own FHL you may wish to consider selling or gifting FHL property before the rules are abolished in April 2025. You can also join other significant businesses in lobbying for the “brightline test”.
Please get in touch with us if you want to get some advice on what to do if you own an FHL. The withdrawal of CGT reliefs will likely result in higher tax liabilities in the future so it will be key to plan for this over the next 12 months- we can start helping you today!