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Chancellor planning to abolish furnished holiday lets regime – report

  • 04/03/2024
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Chancellor planning to abolish furnished holiday lets regime – report
The Chancellor may launch a £300m tax raid on second homeowners who make money from holiday lets to help cut tax by 2p in the Spring Budget.

According to a report in The Sunday Times, Chancellor Jeremy Hunt is looking at abolishing the furnished holiday lets regime, which would add to an annual £500m per year, along with the imposition of a new levy on vapes.

The furnished holiday lets regimes means that landlords can claim capital gains tax relief for trades, they are entitled to plant and machinery capital allowances, and products count as earnings for pension purposes. They can also deduct mortgage interest payments from rental income.

To qualify, the property must be in the UK or European Economic Area (EEA) and must be furnished. Landlords need to make properties available for 210 days per year and let it out for 105 days per year.

The report suggested that the Chancellor would argue that it will also help mitigate the housing shortage in coastal areas and holiday hotspots, as landlords are moving to holiday lets to benefit from tax breaks.

The Sunday Times also suggested that there could be a scaling-back or abolition of non-domiciled tax rules, so foreign nationals living in the UK do not have to pay tax on foreign income.

The moves are to help find money to reduce personal taxes by 2p in the Budget, which is taking place on Wednesday this week, the report said.

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