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Did you know that landlords who rent out furnished holiday homes are on the brink of losing significant tax reliefs? If you’re involved in letting furnished holiday properties, time is of the essence. Major tax changes are set to take effect on 6 April 2025, and failing to act before this deadline could wind up costing you thousands of pounds. It’s crucial to stay informed and take action now to safeguard your financial interests.
Why Does 5 April 2025 Matter?
Currently, landlords with furnished holiday lets (FHLs) enjoy some powerful tax perks. But starting from 6 April 2025, these perks will disappear. After this date, FHLs will be treated just like regular residential lettings, meaning landlords will lose key tax benefits, especially around capital gains tax (CGT).
Here’s the critical part: You still have a limited opportunity to lock in these reliefs—if you act before 5 April 2025!
What’s Changing for Capital Gains Tax?
Until now, landlords of FHLs could claim Business Asset Disposal Relief (BADR). BADR dramatically reduces the capital gains tax rate when you sell qualifying properties, helping you keep more money in your pocket.
Under current rules, if you stop your FHL business by 5 April 2025, you still have three years to sell your properties and benefit from BADR. That means if you completely cease your holiday letting business on or before this date, you can sell the assets within three years and pay a much lower tax rate on the gains.
Important: You can’t just sell a few properties; your entire FHL business must stop to claim BADR.
How Much Can You Save?
The savings are impressive, but timing is everything:
- If you sell your FHL in 2024/25, your capital gains tax rate drops to 10% (potentially saving up to £140,000!).
- Wait until 2025/26, and the rate rises to 14%, reducing your savings to about £100,000.
- Sell after 6 April 2026, and the rate jumps to 18%, shrinking your potential savings to £60,000.
This means earlier action equals bigger savings.
Passing Properties to Family? Don’t Miss This!
Another powerful relief you could lose is Gift Holdover Relief. Right now, if you gift your furnished holiday home to someone (like your children), you can delay paying capital gains tax. The person receiving the property pays the tax only when they sell it later, making it easier to pass wealth to your family without an immediate tax bill.
But here’s the catch: To benefit from this relief, you must gift the property before 6 April 2025.
Don’t Lose Out!
These reliefs can be incredibly valuable—they can save tens of thousands of pounds. But once they’re gone, they’re gone for good.
Take action today to secure your huge tax savings!