Holiday lets tax regime to be abolished in 2025

Different Chancellor; same policy for furnished holiday lets.

It was hoped that plans to abolish the furnished holiday lettings tax regime had been kicked into the long grass after the measure failed to make it through parliament before the general election campaign. However, just a few weeks after taking power, the new Labour government has decided to move forward with the spring budget proposal – which appeared on the HMRC website earlier this week.

There has been plenty of reaction to the news from industry bodies, including the Professional Association of Self-Caterers (PASC UK), the UK Short-Term Accommodation Association (UK STAA), and the Association of Scotland's Self-Caterers.

Alistair Handyside, Chair, PASC UK, said he had received an email from the Treasury earlier this week announcing its intentions.

He added: "PASC UK led one of largest ever sector pushbacks on this when it was first raised in the spring budget, ending up being the only sector association to meet in person with both the Treasury Minister and Chancellor. Both committed to further meetings and to hold a sector consultation – and the email confirms this will be the case. So it's all to play for. Previous to the election, we gathered and presented a vast amount of evidence to various government departments, so are ready to go again on this."

Mr Handyside added: "If the abolition goes through as proposed, the first casualties will be small self-catering businesses in coastal and rural areas. These form the bed stock of the fragile eco-system that makes up these visitor economies. If you damage the bed stock – as will happen if this goes through – you will see pub, restaurants, and visitor attractions closing too, as guests who stay in our sector spend money in these local businesses, far exceeding what locals spend."

Mr Handyside also noted the policy is at odds with the new government's stated ambition for economic growth, adding, 'we will be making that point loudly and clearly on behalf of the sector'.

In a LinkedIn post, UK STAA said the Treasury had asked to meet its CEO, Andrew Fenner, to discuss the impacts of the proposals on the short-term rentals industry, adding, 'STAA will be fighting for our industry and pushing the government to support tourism and the thousands of small businesses across our sector. STR tourism needs support, not yet more legislation.'

UK STAA encouraged members to send in their thoughts and inputs on the issue, which Mr Fenner will feedback to the Treasury.

In a separate LinkedIn post, Mr Fenner said: "Travel and tourism is a vibrant growing industry. It suffered more than many during the pandemic and needs support from the new government to reach its full potential. 

"STAA is leading the fight for our sector to make sure we get that support. We will work with stakeholders across government and industry, and build a sustainable, responsible future for UK tourism."

Fiona Campbell, CEO, ASSC, said: “Both the Scottish and UK governments should be laser focused on a pro-small business, pro-growth agenda to help revitalise our economy. Unfortunately, the abolition of the current tax regime runs contrary to that objective and will damage a key part of our tourist economy which supports jobs and livelihoods in communities across the UK. 

"This is particularly unfortunate news for the sector in Scotland, as self-catering operators continue to be hammered by the costs associated with the Scottish government’s onerous short-term let licensing and planning regulations and who will also face the introduction of a visitor levy. Scrapping the FHL tax regime will make a bad situation much worse. 

"We would encourage all affected stakeholders to engage with the Treasury’s consultation on FHLs, highlighting the negative impact this will have for small businesses.”