The Chancellor announced in the Spring Budget 2024 that he was scrapping the beneficial furnished holiday let rules from April 2025. This has caused quite a stir in the UK housing market ...
It is essential for holiday let owners to start planning for the potential impacts of the changes!
While the decision was made to increase the availability of houses for local residents, it has left many holiday let owners scratching their heads, wondering about the future of their properties.
"Current rules allow property owners to benefit from significant tax reliefs!"
These rules also incentivise property owners to maintain high standards and provide quality accommodation for tourists, contributing to the growth of the UK's holiday industry. However, with the proposed changes, many holiday let owners may be forced to sell their properties or convert them back to traditional buy-to-let properties.
One of the major concerns for holiday let owners is the potential loss of income. With the scrapped rules, owners may no longer be able to claim tax reliefs, resulting in a higher tax bill.
This could make it financially unviable for owners to continue operating their properties as holiday lets. Additionally, the proposed tests by the Office for Tax Simplification could make it difficult for smaller property owners to qualify for tax reliefs, further impacting their income.
"Moreover, the scrapped rules could also have a ripple effect on the UK holiday industry!"
Furnished holiday lets are a popular choice for tourists, especially in rural areas where there may be limited hotel options. By limiting the availability of such accommodations, the UK may see a decline in tourism, affecting the local economy and businesses that rely on tourist spending.
On the other hand, some argue that the scrapped rules could have a positive impact on the housing market! By bringing holiday let properties onto the market, it could potentially increase the supply of housing for local residents, addressing the ongoing issue of housing shortage. However, the question remains whether this will be enough to offset the potential negative impacts on the holiday industry and on holiday let owners themselves.
To address the concerns raised by the scrapped rules, the Office for Tax Simplification has proposed an alternative solution of adding a 'private use' restriction. This would limit or remove the potential for personal occupation of commercial furnished holiday lets, similar to the restrictions placed on many AirBnBs.
This could potentially strike a balance between the interests of local residents and the holiday industry while still providing some tax relief for holiday let owners!
It is also worth noting that the scrapped rules are not set in stone yet, and there is still time for the government to make changes or reconsider the decision, especially as we have a General Election in 2024 and potentially a new Chancellor.
However, it is essential for holiday let owners to start planning for the potential impacts of the changes and consider alternative options for their properties.
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 Furnished Holiday Lets and the new rules around them, it may be a great idea to call me on 01908 774323 and let's see how I can help.
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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