Are you a short-let Landlord? Read on!
As you may be aware, starting from April 2025, the UK Government is abolishing the Furnished Properties Tax Regime. This means that properties that are used for Furnished Holiday Lettings (FHLs) will be:
1. Subject to standard residential property Capital Gains Tax (CGT) rates (instead of the Business Asset Disposal Relief of 10%)
2. Removal of capital allowances for fixtures and furnishings and
3. Removing the ability to offset the full mortgage interest costs from profits.
This move brings FHL onto a par with long-term lets.
This tax change follows swiftly on the heels of introducing a licencing scheme for short-term lets in Scotland and may prove to be the last nail in the coffin for landlords in this sector.
If you are currently a FHL landlord, it will be crucial to consider how this change will affect you and your business. You may want to explore alternative options, such as long-term letting. This could be a better option for you regarding tax implications and profitability. Long-term letting can provide a stable and consistent income stream without the added challenges of managing an FHL business. Before making any decisions, though, it is worth considering the pros and cons of each option.
At Chapmans, we understand how significant our client’s property investments are and are committed to providing the best advice and support to help you navigate these changes successfully.
