Spring Budget 2024 – Furnished Holiday Lettings regime to be abolished

During the Spring Budget, the Chancellor Jeremy Hunt announced that the Furnished Holiday Lettings regime is to be abolished with effect from 6^th April 2025 (note: NOT 2024).

Holiday lets have had useful tax advantages for many years. It has been possible for them to be treated as a trade rather than as a rental property, making more generous deductions against income available. There has also been a significant advantage in property Capital Gains Tax when selling a furnished holiday let.

This means that holiday let profits will need to be calculated and taxed based on the same tax laws as other rental property profits. This is likely to mean that if holiday let income remains at the same level, owners are likely to see an increase in the amount of tax payable.

With the abolition of the Furnished Holiday Lettings regime, if a holiday let is sold after the 6th April 2025 Business Asset Disposal Relief, with its potentially low 10% capital gains tax rate, will not be available.

While there is another year yet before the abolition, there will be measures in place from 6^th March 2024 (the day of the Budget announcement) to prevent tax planning steps that may try to manipulate the sale date of a holiday let so it appears to take place before 6^th April 2025.

Detailed legislation covering the change has not yet been released, but if you’re thinking about selling your holiday let it may be worth giving some thought to the timing of the sale to avoid paying more tax than necessary. Of course, as with all tax planning, you should also consider your overall tax situation, any potential downsides, and your personal priorities.

If you have any specific questions about the abolition of the Furnished Holiday Lettings Regime, or any more general questions about how the Spring Budget will affect you, please get in touch.

You can see our Spring Budget Summary here.