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  • Shepherd Partnership

Furnished Holiday Lettings regime to be abolished

In disappointing news for holiday home owners, the Chancellor announced the abolishment of the Furnished Holiday Lettings regime in last week's Spring Budget - with effect from 6 April 2025.

If you run a holiday let, then you are most likely aware of the tax advantages that holiday lets currently have - in that furnished holiday lets can be treated as a trade rather than as a rental property. This means there are more generous deductions against income available. There has also been a significant advantage in property capital gains tax when selling a furnished holiday let.

But the abolishment from 2025 will mean that your holiday let profits will need to be calculated and taxed based on the same tax laws as other rental property profits. Unfortunately, this means you are likely to see an increase in the amount of tax payable.

Also, if you sell your holiday let after 6 April 2025, Business Asset Disposal Relief, with its potentially low 10% capital gains tax rate, will not be available.

Detailed legislation covering the change has not been released yet, but if you are thinking about selling your holiday let it may be worth giving some early thought to the timing of the sale so that you do not pay more tax than necessary.

We can help to prepare a personalised analysis of how the withdrawal of the furnished holiday letting regime may affect you. We are here to help.

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