Asked by: Harriet Cross (Conservative - Gordon and Buchan)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of changes in tax liabilities and reliefs on small-scale furnished holiday let operators transitioning to long-term residential letting; and what the difference in tax relief will be between (a) the current Furnished Holiday Lettings tax regime and (b) the standard residential letting arrangements from April 2025.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The Government will abolish the Furnished Holiday Lettings (FHL) tax regime from April 2025. The FHL tax regime has created a distortion that favours short-term holiday lets over longer-term rentals. Abolishing it will equalise the tax treatment of FHL and non-FHL landlords’ income and gains, making the tax system fairer.
Tax reliefs will still be available to individuals providing furnished holiday letting services, including mortgage interest relief at 20 per cent and relief for the replacement of domestic items. These reliefs will be at the same level as those available to landlords who provide long-term residential lets.
Asked by: Harriet Cross (Conservative - Gordon and Buchan)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to the policy paper entitled Abolition of the furnished holiday lettings tax regime, updated on 7 November 2024, on what evidential basis her Department determined that the furnished holiday let tax regime created market distortions in relation to (a) property investment patterns and (b) tax advantages.
Answered by James Murray - Exchequer Secretary (HM Treasury)
The Government will abolish the Furnished Holiday Lettings (FHL) tax regime from April 2025.
The FHL tax regime has created a distortion that favours short-term holiday lets over longer-term rentals, by providing a tax incentive to invest in and provide the former over the latter.
Abolishing the regime will remove this incentive by equalising the tax treatment of FHL and non-FHL landlords’ income and gains.