Essential advice for furnished holiday let owners

With the end of the 2024/25 tax year just around the corner, it is important for individuals who own Furnished Holiday Lets (FHL) to assess whether they can maximise the benefits of the more favourable tax reliefs before the rule changes. 

We previously published an article with the details of the changes which can be found here. 

Here are five things you may wish to keep in mind: 

• If you are planning on selling a FHL, consider selling before 6 April 2025 to take advantage of a CGT rate of 10% rather than the alternative 24%, subject to the availability of Business Asset Disposal Relief. 
• To maximise tax benefits, consider purchasing fixtures, fittings and plant before 6 April 2025. By doing so, you can take advantage of claiming capital allowances which will no longer be available after this date.
• FHLs which are jointly held by spouses or civil partners will automatically be taxed 50/50 from 6 April 2025.  If the ownership of the property is different an Income Tax election will need to be made.
• Subject to any financial advice, consider making pension contributions before the 6 April 2025 deadline. FHL income counts as relevant earnings whereas property income does not, potentially restricting your ability to make pension contributions in the future
• Re-evaluate your property finance arrangements in light of the changes to tax deductibility beyond April 2025. Ensuring your financial strategy aligns with the new tax rules can help you maintain optimal tax efficiency.

If you have any questions or need further assistance, please don’t hesitate to contact your usual Kreston Reeves advisor. It’s crucial to act now to implement any necessary changes and take full advantage of the current tax benefits before the new rules come into effect.