Furnished Holiday Lets in UK Face Tax Hike From April 2025
What can landlords do?
Posted by Helen Beaumont on 07/08/2024 @ 8:00AM
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 ...
Landlords who offer Furnished Holiday Lets will no longer have a tax advantage over those who provide long-term residential tenancies!
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 likely have to pay more 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.
Until next time ...
HELEN BEAUMONT
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about what's happening with Furnished Holiday Lets, do give me a call on 01908 774323 and let's see how I can help you.
Helen brings the personal tax planning experience of the top 20 tax companies to Essendon. Formerly of MacIntyre Hudson (with 45 offices nationwide), Helen worked at Chancery for more than 10 years before joining Essendon as the personal tax specialist.
Tax Planning can make a considerable difference to your tax liability. Helen has specialist knowledge and experience in tax planning and uses every opportunity to minimise your tax bill is utilised. By analysing your investments, income, profit and expenditures, Helen will provide strategic tax planning expertise that could offer significant savings, whilst delivering clear, honest advice and guidance.
When Helen is not at Essendon she spends time with her young son and likes going on long walks with the family dog.
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