Budget 2024: Holiday Let Tax Relief Scrapped

Chancellor Jeremy Hunt has scrapped furnished holiday let tax relief for property investors in his Spring Budget 2024.

The days before his announcement, speculation was rife that he would slash mortgage tax relief for short-term lettings to raise £300 million to pay for other tax cuts.

But no one expected such a shock move.

The Chancellor told MPs that abolishing the furnished holiday let regime would make the property tax system fairer and more efficient, especially for people priced out of living in their local area.

He said representatives of councils in Cornwall, Devon, and Central London visited 11 Downing Street, prompting the measure.

Stamp Duty change

Alongside scrapping furnished holiday lets, Hunt also consigned stamp duty multiple dwelling relief to the rubbish heap.

The decision to abolish both tax reliefs will give the government an extra £600 million in 2028-29.

Furnished holiday lets will attract the same tax treatment as standard buy-to-lets.

From April 6, 2025, holiday let owners no longer have to separate income and spending from other letting properties or complete separate accounts or tax return pages.

Legislation to embed the change will be published in due course, said the Treasury.

The Chancellor argued that Stamp Duty Multiple Dwellings Relief was riddled with fraudulent and abusive claims.

His comments follow an external evaluation that showed no substantial evidence that the relief is meeting its original objectives of supporting investment in the private rental sector.

Property transactions with contracts exchanged on or before March 6, 2024, will continue to benefit from the relief regardless of when they are completed, as will any other purchases completed before June 1, 2024.

CGT higher rate cut

Hunt also cut the higher capital gains tax rate for property investors from 28 percent to 24 percent, while the lower rate remains at 18 percent.

“This will encourage landlords and second homeowners to sell their properties, making more available for a variety of buyers, including those looking to get on the housing ladder for the first time, while raising revenue over the forecast period. Private Residence Relief will remain in place, meaning most residential property disposals will pay no CGT,” said a Treasury spokesman.

The CGT personal allowance or annual exempt amount (AEA) stays at £6,000 until April 5, 2024, falling to £3,000 for the next tax year. However, it is still subject to annual uprating in line with inflation.

Holiday let owners should note that their properties will not qualify for reduced CGT rates under Business Asset Disposal Relief from April 2025.

In a budget speech that lasted just over an hour, the Chancellor did not discuss any other tax or policy changes directly affecting private landlords.

Holiday Let FAQ

What is a furnished holiday let?

A furnished holiday let or short-term let is a rented home fully equipped for guests with just their day-to-day belongings to visit for short stays in the UK or European Economic Area (EEA)

What are the holiday let tax breaks?

Renting out holiday lets is considered a business rather than an investment, like buy-to-let. As a business, holiday lets attracted 100 per cent mortgage interest relief and other tax advantages, such as paying business rates instead of council tax.

What are the qualifying rules for holiday lets?

The qualifying rules for holiday lets depend on where the property is located as they vary between England, Scotland and Wales. The conditions cover availability, pattern of occupation, and time let.

In England, the home must be available to let for 210 days to guests other than the owners, their family, or friends. Individuals can only rent the property for up to 31 days a year, but paying guests must stay there for at least 115 days a year.

Does scrapping FHL tax relief mean I can’t let the property?

No, owners can still rent holiday lets, but the accounting records and tax treatment changes from April 6, 2025.

Can I still claim Business Asset Disposal Relief on an FHL?

The documentation is unclear, but it would seem a furnished holiday let stops being tax-treated as a business asset from April 5, 2025, which likely means the relief is lost.