Self-catering industry lobbyists have called on the government to delay plans to abolish the furnished holiday lettings (FHL) tax regime after the Treasury consultation period ended on 15 September.
The Professional Association of Self-Caterers (PASC) and the Association of Scotland’s Self-Caterers (ASSC) both released statements to mark the end of the consultation, which included representatives from both bodies meeting Treasury officials.
The key proposed changes – which were reintroduced by the new UK government in late July after originally being announced by former Chancellor Jeremy Hunt during the spring budget – include:
Relief for finance costs on FHLs (interest on loans and mortgages) being restricted to basic rate (20%) tax deduction only.
Capital allowances will no longer be available.
Capital gains tax reliefs will be removed.
FHL income will no longer be classed as relevant earnings when calculating pension tax relief.
It is proposed the new changes will take effect from April 2025 (tax year 2025/26).
Alistair Handyside, Chair, PASC, said: “We urgently call on the government to allow pause before introducing any changes to the FHL regime and wait until [it] has a full picture of the market. The speed of abolition simply does not give the micro-businesses time to transition. It will damage rural and coastal visitor economies – not only those in our sector, but pubs, restaurants, visitor attractions, and more.”
Handyside added: “The removal of the FHL tax regime is the latest in a series of attacks on our vital British tourism economy. It is firmly anti-business and anti-investment, and will harm local economies in rural and coastal communities.
"We are ready to collaborate with the Treasury and share our expertise…to come up with fair solutions for a sector that provides good value domestic holidays, with monies spent and retained in the UK.”
Handyside said PASC would continue to press for further meetings and consultation.
Fiona Campbell, CEO, ASSC, echoed Handyside’s comments.
She said: “We strongly urge the government to reconsider the proposed abolition of the FHL tax regime. The pace of change is simply too rapid for the thousands of micro-businesses that have operated under this tax framework for up to 40 years. Transitioning to a new tax regime by April 2025 is an unrealistic expectation. Forcing these businesses out of the FHL regime will have immediate and severe consequences, many of which are unintended, yet will cause significant financial burden to businesses that cannot bear it.”
Campbell continued: “The proposed abolition of the FHL tax regime is an anti-growth policy that will result in reduced investment, job losses, and a decline in local economies, particularly in rural and coastal areas. For the already hard-pressed self-catering sector in Scotland, this comes at a time of intense regulatory and financial strain, driven by the Scottish government interventions, including short-term let licensing and planning, changes to non-domestic rates, and the introduction of visitor levies.
“The accumulative impact of regulatory and taxation measures with no time to adjust will stifle growth, depress local economies, and further hollow out rural communities.”
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