What does the abolishment of Furnished Holiday Lets mean for me?

As announced in the Spring Budget, the Furnished Holiday Letting (FHL) Scheme will be abolished in April 2025 so your property will no longer be awarded favourable tax treatment over other residential lettings. 

The FHL Scheme was introduced in the 1980s after consideration as to whether short term holiday letting businesses should be treated as a trade. Instead of treating the holiday lets as a trade, the new scheme was created to give favourable tax treatment. 

The current FHL scheme includes: 

• Interest and finance costs can be deducted from income with no restriction 
• Capital allowances can be claimed on plant and machinery 
• On sale business asset reliefs are available 
• Profits from FHLs are treated as relevant earnings 

The abolishment will therefore mean: 

• Interest and finance costs will be restricted to 20% basic rate relief 
• No capital allowances, instead replacement of domestic items relief 
• On sale the business asset reliefs will not be available meaning a higher rate of tax on sales 
• Profits will no longer be included as relevant earnings and will therefore result in lower tax relief for pension contributions 

How can we help? 

If you have an furnished holiday let and need an experienced accountant, at TaxAssist Accounts we can support and guide you through the transition. Please contact us on 01383 665 666 or use our simple online contact form to arrange a free initial consultation.  

Date published 11 Mar 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

---