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UK government to abolish FHL tax regime


The UK government wants to tax holiday home owners

UK Chancellor Jeremy Hunt announced government plans to abolish the Furnished Holiday Lettings (FHL) tax regime during today's spring budget – and it's gone down like a lead balloon in the short-term rentals industry.


The announcement

Here is the key statement from the budget: "The government will remove the current incentive for landlords to offer short-term holiday lets rather than longer-term homes by abolishing the FHL tax regime. This will level the playing field between short-term and long-term lets and support people to live in their local area. This will take effect from April 2025 and draft legislation will be published in due course."


Industry reaction

Fiona Campbell, CEO of the Association of Scotland’s Self-Caterers, said: “Self-catering businesses should not be seen merely as a quick revenue source by the UK government, but instead as a vital, valued, and integral part of our vibrant tourist market. The sector provides huge economic benefits for local economies and local communities and must be supported by government rather than being used as a convenient scapegoat for wider failures in housing policy."


As reported by Short-Term Rentalz, Ben Edgar-Spier, Head of Regulation and Policy at Sykes Holiday Cottages, said: “Holiday let owners have been unfairly scapegoated in the guise of controlling rising house prices and availability. Short-term rentals truly are the economic lifeblood of many parts of the UK, driving spending, providing direct employment, and supporting local businesses alike. It’s therefore illogical to penalise these short-term let businesses over those with empty second homes – which contribute nothing to local economies – when you consider these benefits."


Our thoughts

What 'abolishing' the FHL tax regime actually looks like is anyone's guess right now. And with a change of government looking increasingly likely between now and April 2025, we will have to wait and see exactly what materialises.


The UK government appears to be trying to hammer FHL owners in the same way it went after buy to let investors with the abolition of Section 24 – which removed mortgage interest relief as a fully tax deductible expense.


As an industry, it is important to continue banging the drum for the short-term rentals sector by highlighting the positive social and economic impacts of these businesses – and that is precisely what we will continue to do at Holiday Cottage Handbook.

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