Considering the Sale of Your Furnished Holiday Let Before Tax Changes in 2025?
If you own a furnished holiday let (FHL), you’re currently benefiting from some significant tax advantages that aren’t available to traditional residential landlords. These benefits are particularly impactful when it comes to capital gains tax. For instance, if you’re thinking about selling or transferring your FHL, you can currently enjoy business asset rollover relief, business asset disposal relief, and gift-holdover relief. But here’s something crucial to consider: these favourable conditions are set to change. After 5 April 2025, FHLs will be taxed just like any other property rental, with gains taxed at the usual residential rates.
What Does This Mean for FHL Owners?
Simply put, if your property has increased in value and you’re contemplating a sale or a transfer, acting before 5 April 2025 could save you a considerable amount in taxes.
Business Asset Rollover Relief This relief allows you to defer the tax on any gains from the sale of your FHL if you reinvest the proceeds into another business asset, like another holiday let. Here’s how it works: if you reinvest all the sale proceeds, the gain from the original sale is subtracted from the cost of the new asset, effectively deferring your tax bill until you sell the new property.
Business Asset Disposal Relief (BADR) Previously known as Entrepreneurs’ Relief, BADR taxes gains at a reduced rate of 10% up to a lifetime limit of £1 million. This relief is available to you if you have owned the FHL business for at least two years.
Gift Holdover Relief This relief is particularly beneficial if you’re planning to give your FHL to a family member or sell it below market value. It allows you to defer the gain, reducing the recipient’s base cost in the process.
Why Act Now?
From 6 April 2025, the reliefs outlined above will no longer apply to FHLs. If you sell after this date, your gains will be taxed at 18% or 24%, depending on your tax bracket. Furthermore, all residential property gains must be reported to HMRC and tax paid within 60 days of completion.
Need More Advice?
Navigating these changes can be complex, but you don’t have to do it alone. If you’re considering selling your furnished holiday let or want to understand how these upcoming changes might affect you, why not get in touch? Contact Jon or our team here at Jon Davies Accountants for tailored advice that helps you make the most out of your assets.
 
 
 
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Any questions?

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