Abolishment of Furnished Holiday Let (FHL) Regime

It was announced in the March 2024 Budget that the Furnished Holiday Let (FHL) regime would be abolished from 6 April 2025.

Rental properties that qualify as a FHL have experienced more favourable tax treatment in that there are no restrictions on tax relief of loan interest and finance costs, capital allowances can be claimed on asset purchases, FHL profits are seen as relevant earnings for the purposes of personal pension contributions and in addition Capital Gains Tax reliefs may be available if FHL properties are sold.

From 6 April 2025, FHLs will be treated the same as residential lettings for tax purposes.  Transitional rules are expected to be announced to deal with the changes in tax treatment of FHL properties, however no additional guidance has been published since the Budget.