As of 6 April 2025, the Furnished Holiday Lettings (FHL) regime has officially been scrapped. So, what does that mean for your holiday let property?
In short, your property will now be treated as part of your main UK or overseas property business, and that comes with a few tax shake-ups. Here’s what’s changing:
What’s no longer available:
- Tax relief for dwelling-related loan interest will be restricted to basic rate (20%).
- New capital expenditure will generally not qualify for capital allowances, Instead, the replacement of domestic items relief may apply.
- Capital Gains Tax reliefs for trading business assets (such as Business Asset Disposal Relief, Gift Relief and Rollover Relief) will no longer be available.
- Income from the property will no longer be included in ‘relevant UK earnings’ for the purposes of calculating maximum pension relief.
But it’s not all bad news – here’s what you can still benefit from:
- It will be possible to carry forward losses that were generated by an FHL business prior to 6 April 2025. These losses will be available for set off against future years’ profits of either the UK or overseas property business, as appropriate.
- Where an FHL business had a capital allowances pool on 5 April 2025, the pool can be carried forward within the general property business. Going forwards, it will be possible to claim writing-down allowances on the pool.
- For Business Asset Disposal Relief (BADR), where the FHL conditions were satisfied in relation to a business that ceased prior to 6 April 2025, relief may continue to apply to a disposal that occurs within the normal 3-year period following cessation.
Got a property that used to qualify as an FHL? Not sure how these changes affect you?
We’re here to help, get in touch with us today for tailored advice on 01527 368220 or at info@ojwassociates.co.uk
