Abolition of Furnished Holiday Lettings Status (FHL’s) tax status. What does this mean … and does this also impact Airbnb type lets?
In the last Budget, it was announced that the furnished holiday let regime will be abolished from 6 April 2025.
A property qualifies as a FHL provided it met certain conditions on availability (must be available 210 days per year) and occupancy (must be let 105 days per year) during the year.
There have been many tax benefits to qualifying as a FHL:
➡️ Mortgage Interest costs are fully relievable for tax – different to normal rental properties where only basic rate relief is now available.
➡️ Capital allowances can be claimed on plant and machinery.
➡️ Income from FHLs counts towards earned income for pension contribution purposes (standard rental income does not).
➡️ Capital gains advantages exist. Business asset disposal relief can apply to FHLs, meaning CGT rates on sale can be limited to 10%.
Properties falling under the FHL regime are typically furnished short term lettings due to the qualifying conditions. There is therefore scope for many taxpayers to be caught out by this change due to the increasing popularity in recent years of sites such as Airbnb encouraging short term lettings.
HMRC have also announced the implementation of anti–forestalling rules from 6 March 2024 to prevent FHL owners gaining a CGT advantage through the use of unconditional contracts.
If your property currently qualifies as a FHL, please do not hesitate to contact:
Paul Buckley
paul.buckley@waltonsba.co.uk
or
Ben Bramwell
ben.bramwell@waltonsba.co.uk
Please note: Our blog articles could be subject to change following the new Chancellor’s upcoming Budget announcements.
