The furnished holiday let (FHL) rules are special rules for qualifying short term let properties which attract various tax advantages.
It was announced today that the FHL regime would be scrapped entirely from April 2025, meaning that all let properties would be treated the same whether they are long term lets or short term “holiday let” type properties.
The various tax advantages which will be removed from April 2025 are as follows:
- FHL properties are currently entitled to full tax relief on mortgage interest, whereas long term lets are only entitled to a 20% tax credit on mortgage interest.
- The current rules for allocating FHL profits/losses between property owners are generally more flexible than those on long term let properties.
- CGT Holdover Relief (meaning capital gains arising on a gift can be deferred).
- Business Asset Disposal Relief (meaning gains realised on sale can be taxed at 10%).
- CGT Rollover Relief (meaning that gains arising on sale can be deferred by reinvesting into other business assets (and conversely FHLs will no longer be a qualifying asset for the purposes of reinvesting funds realised on sales of other business assets).
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