Furnished Holiday Lettings tax regime abolished

Last updated: 02/10/2024

At the Spring Budget 2024, the previous Chancellor announced that the favourable tax treatment furnished holiday lettings (FHLs) currently benefit from will be abolished with effect from 6 April 2025.
The current government decided to continue with abolishing the FHL regime. On 29 July 2024, the government published a policy paper and draft legislation.
Currently, FHLs benefit from a range of beneficial tax rules including:
- The full amount of finance costs (i.e. mortgage interest) can be deducted from FHL income;
- On disposal of an FHL, business asset disposal relief may be available which results in a 10% capital gains tax rate applying;
- Profits from FHLs count as relevant earnings for pension purposes meaning tax-advantaged pension contributions can be made;
- Relief for capital expenditure is more generous for FHLs than ordinary lets.
Individuals with FHL and non-FHL properties will no longer need to calculate and report income separately.
Timing: The current treatment FHLs benefit from is due to be abolished from 6 April 2025. Stakeholders were invited to comment by 15 September 2024 on the draft legislation

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