Big Tax Changes for Furnished Holiday Lets (FHL): What Property Owners Need to Know
From 6 April 2025, the UK Government will abolish the Furnished Holiday Lettings (FHL) regime, affecting thousands of landlords and property investors. If you own a UK holiday rental property, these tax changes could significantly impact your income, tax relief, and investment strategy.
Key Tax Impacts of FHL Abolition:
- Loan interest relief will be limited to the basic rate of 20%.
- Capital Allowances on new assets will be removed — replaced with the Replacement of Domestic Items Relief.
- Capital Gains Tax reliefs for business assets will no longer apply.
- Income from FHLs will not count towards relevant UK earnings for pension contributions.
Transitional Reliefs for Holiday Let Owners:
- Pre-2025 FHL losses can still be carried forward and offset against future UK/overseas property profits.
- Existing capital allowances pools as of 5 April 2025 can still receive writing-down allowances.
- Business Asset Disposal Relief (BADR) may still be available for sales within three years of business cessation if FHL conditions were met before April 2025.
Need help with your holiday let tax planning? Get in touch with our property tax experts to secure the most efficient path forward.
2025 UK Mortgage Update: More Options for First-Time Buyers
According to Moneyfacts, there’s good news for first-time buyers in 2025. Availability of 90% and 95% Loan-to-Value (LTV) mortgages has reached its highest point since 2008. While house prices and interest rates remain elevated, mortgage affordability is improving.
Key Mortgage Trends:
- Two-year fixed rate average dropped from 5.39% to 5.32%.
- Five-year fixed rate average fell from 5.22% to 5.18%.
The Bank of England is set to make its next interest rate decision in May. With economic uncertainty and global tariffs in play, predictions remain cautious.
Buy-to-Let Landlords Shifting to Limited Company Structures
A new Hamptons report shows a sharp rise in landlords using limited companies to manage buy-to-let property portfolios. This is largely due to 2016 tax changes restricting mortgage interest relief for individual landlords.
Buy-to-Let Business Insights:
- Buy-to-let companies now outnumber any other business type at Companies House.
- There’s been a 332% increase in company-held rental properties over the last 9 years.
While incorporating your rental business can offer tax advantages, it’s not without additional costs.
Thinking about forming a buy-to-let limited company? Our advisors can help assess if it’s the right move for your situation.
Scotland’s Rent Control Bill: New Housing Law Explained
The Scottish Government has introduced amendments to the Housing (Scotland) Bill, proposing rent caps in designated rent control areas.
Proposed Changes:
- Rent increases capped at CPI inflation + 1%, with a maximum of 6%.
- Applies both during a tenancy and between tenancies.
- New protections include renters’ rights to keep pets and decorate their homes.
These changes aim to strengthen tenant protections and improve housing affordability.
Northern Ireland Introduces Intermediate Rent Scheme
A new Intermediate Rent Model has been announced in Northern Ireland, offering more affordable homes to those who earn too much for social housing but struggle with private sector rents.
Scheme Highlights:
- 300 new homes to be built.
- Rent set at below-market rates, not exceeding 30% of household income.
- Eligibility:
- Single adults earning under £30,000/year.
- Two-adult households earning under £40,000/year.
Construction is expected to begin in early 2026, with homes available to rent later in the year.
Need Tailored Property or Tax Advice?
Whether you’re adjusting to the end of FHL rules, exploring buy-to-let strategies, or managing the effects of UK housing legislation, our team is here to help.Contact us today for expert guidance on tax planning, incorporation, and property investments in the UK.