Following the Government's announcement at the Spring Budget 2024 that the furnished holiday lettings (FHL) tax regime would be abolished from 6 April 2025 for income tax and capital gains tax purposes and from 1 April 2025 for corporation tax purposes, HMRC have published a policy document, draft legislation and an explanatory note as part of its Finance Bill 2024-25 draft legislation and the legislation is included in Finance Bill 2025 — see Tolley's Finance Bill Tracking Service, Finance Bill 2025, cl 25, Sch 5. The FHL tax regime means that the qualifying letting of a furnished let is treated as a trade which is advantageous for the purposes of claiming capital allowances, interest costs and pension contributions. In addition, on disposal of a qualifying FHL property, the owner can claim capital gains tax reliefs including business asset disposal relief (BADR) which taxes the gain at 10%.
In summary, the impact of the abolition of the FHL tax regime is—
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Web page updated on 17 Mar 2025 13:35