Furnished Holiday Lets in UK Face Tax Hike From April 2025

From April 2025, income and gains from furnished holiday lets (FHL) in the UK will be treated as regular property income and subject to the same tax rules as standard residential properties ...

The government expects to raise £35 million in extra tax in the first year, and this amount is set to increase to £245 million by 2028-29. This decision has been met with mixed reactions, with some arguing that it will level the playing field for landlords and others expressing concern about the impact on the tourism industry.

The changes to the tax regime for furnished holiday lets will have a significant impact on landlords who rely on this type of property for income!

They will now have to pay Income Tax on their profits and Capital Gains Tax when they sell the property. This could result in a considerable tax bill for some landlords and may lead to them reconsidering their investment in this type of property.

Landlords may also need to review their pricing strategy for their holiday lets, as the tax hike could result in higher rental costs for holidaymakers. This, in turn, could affect the demand for Furnished Holiday Lets and have a knock-on effect on the tourism industry around the country with a ripple effect on other businesses that rely on tourism, such as restaurants, shops, and attractions.

"What can landlords do?"

With the changes to the FHL tax regime set to come into effect in 2025, landlords have some time to prepare and adjust their strategies accordingly. They may want to consider diversifying their property portfolio to include other types of properties, such as long-term residential lets, to offset the potential loss of income from furnished holiday lets.

Landlords could also explore other tax reliefs and deductions that may be available to them, but seeking professional advice from a tax specialist can also help them navigate the changes and minimise their tax liabilities.

Some argue that the changes will level the playing field for landlords and create a fairer market for all types of property rentals. This could potentially lead to more investment in long-term residential properties, which could help ease the housing shortage in the UK.

The impact on the tourism industry remains to be seen, but it is clear that the changes will have far-reaching consequences for the UK property market.

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