0:04 AM, 5th August 2024, About A year ago 2
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The Country Land and Business Association (CLA) has criticised the government’s decision to abolish the Furnished Holiday Lettings (FHL) tax regime, arguing it will stifle economic growth, particularly in rural areas.
The move follows the publication of draft legislation outlining the removal of the FHL scheme from April 2025.
Previously announced by then-Chancellor Jeremy Hunt in the Spring Budget, the FHL tax regime currently offers benefits to properties rented out for holidays for at least 210 days a year, with a minimum occupancy of half that period.
The government estimates scrapping the relief will save the Treasury approximately £245 million annually by 2028-29.
The CLA’s president, Victoria Vyvyan, said: “For many farmers and landowners, diversification into the holiday lettings market is a business necessity.
“The short-term rental and holiday let sector contributes billions to the wider economy, supporting local shops and restaurants and creating tens of thousands of jobs.
“Abolishing the Furnished Holiday Lets regime will only punish people who are helping to grow local economies.”
She adds: “It is far from a tax loophole, providing a crucial support mechanism, strengthening the resilience and viability of many rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation.
“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community’s economic vitality.”
The government’s policy paper outlines the rationale behind the FHL tax regime abolition.
Implemented in 1984, the scheme offered more favourable tax treatment for short-term holiday lets compared to standard residential properties.
The proposed change aims to create a fairer system by removing these tax advantages for FHL landlords.
The abolished regime previously applied to individuals, corporations and trusts operating or selling FHL properties.
The government maintains that this policy promotes fairness by aligning the tax rules for FHLs with those for other property businesses.
The move removes the previously enjoyed tax advantages for FHL landlords in four key areas:
Following the repeal, former FHL properties will be considered part of the person’s UK or overseas property business and subject to the same rules as non-furnished holiday let property businesses.
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Member Since May 2023 - Comments: 190
8:41 AM, 6th August 2024, About A year ago
“The government maintains that this policy promotes fairness by aligning the tax rules for FHLs with those for other property businesses”
Except that property businesses are subject to an unfair S24 regime to tax costs as if they were profit, when every other business is taxed on revenue less costs equal profit.
This remains unfair to property businesses and completely inconsistent with the initiative to make property businesses more professional. That initiative is impossible when there is no profit to invest in training and compliance.
This change to FHL is another delusion from the treasury in their ivory tower that ignorant housing ministers and gready chancellors want to impose safe in the knowledge that they will have no accountability when their mistakes become obvious in the medium term.
James Yarrrow
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Member Since September 2024 - Comments: 1
9:08 AM, 8th September 2024, About A year ago
The crux of there not being enough affordable local homes in popular tourist areas, is primarily due to a large increase in people relocating from UK suburban and urban areas to tourist areas in search of a better quality of life.
It is now much more viable for younger working generations to relocate, with hybrid/ work from home seen as the norm, fibre optic broadband in rural areas.
These relocators can sell their houses for city money and then afford to out bid the locals.
Please can professional bodies such as yourself share this, as the media continue to focus only on FHL, hitting the furnished holiday lets harder will only enable more to relocate and not help the locals.