As outlined in the Spring Budget, the favorable tax treatment enjoyed by furnished holiday lettings (FHLs) will be terminated starting April 6, 2025. Consequently, these businesses will be subject to taxation in line with other residential property ventures.

Owners of properties currently classified as FHLs may want to contemplate increasing their spending on equipment like furniture and televisions while the 100% annual investment allowance (AIA) remains in effect. Moreover, the existing capital gains tax reliefs, notably business asset disposal relief (BADR), will also cease from April 6, 2025. Therefore, owners may consider selling their holiday letting properties while the 10% CGT rate still applies to the disposal.

It’s important to note that if multiple FHL properties are owned, they all must be disposed of before April 6, 2025, for BADR to be applicable. BADR typically wouldn’t apply if a single asset is disposed of from a larger business.