HMRC is changing the rules for furnished holiday lets (FHLs) and will abolish specific tax treatment and separate reporting requirements, bringing them into line with other property businesses.
What will be different?
Currently, properties classed as FHLs qualify for exemption from finance cost restriction rules, more beneficial capital allowances, access to relief on chargeable gains for trading business assets, and inclusion as relevant UK earnings when calculating maximum pension relief. This will all be repealed by new legislation set to be introduced shortly.
HMRC has already described what will happen as existing FHLs transition to the new regime. This includes details of how existing capital allowance pools can be used, carrying forward losses, multi-year reliefs that will be honoured, and new eligibility that may apply, such as replacement domestic item relief.
Implementation dates:
- from 1 April 2025 for Corporation Tax and Corporation Tax on chargeable gains
- on or after 6 April 2025 for Income Tax and Capital Gains Tax
The impact of short-term lets on UK housing
Our research piece presents a picture of the market for short-term lets, looks at the broader costs/benefits to our communities, and potential solutions that could maximise the benefits while minimising the drawbacks seen by property agents.