- New taxation rules proposed in the Budget will see the discontinuation of Business Asset Disposal Relief in April 2025 for Furnished Holiday Lets
- This means those selling their self-catering accommodation after this date will no longer qualify for Capital Gains Tax at a reduced rate of 10 per cent, instead paying between 18 and 24 per cent.
Owners of self-catering holiday accommodation who are considering selling up are being urged to act fast to avoid being hit by increased tax bills.
New taxation rules proposed in the recent Budget will see the discontinuation of Business Asset Disposal Relief (BADR) in April 2025 for furnished holiday lets (FHLs), meaning those selling their FHLs after this date will no longer qualify for Capital Gains Tax at a reduced rate of 10 per cent.
Instead, the rate will increase to between 18 and 24 per cent depending on their taxable income.
Lindsay Farrer, a Managing Partner at leading Cumbrian accountancy firm Saint & Co, specialises in providing advice to businesses and sole traders within the tourism and leisure sectors.
She is recommending those thinking about putting their holiday lets up for sale to make a concrete decision sooner rather than later – and before BADR elapses.
She said: “If selling your furnished holiday let is something that has crossed your mind, it may be worth making this happen before April 5, 2025, to potentially save you a lot of tax.
“Changes to FHL taxes will mean that the typical Capital Gains Tax rate of 10 per cent will no longer apply, and you will be looking at paying somewhere around double, or even higher, than you would before that date.
“We appreciate that selling your let will be a big decision, especially if it brings in a steady income stream, but now would be a good time to act if you have short to mid-term plans to move the property on.”
There are an estimated 9,000 self-catering holiday units – equating to almost 41,000 bed spaces – available to rent across Cumbria according to Cumbria Tourism.
Lindsay is providing further advice for those who are unable to sell their property ahead of the April 6 changes but are wanting to avoid the tax hike.
She explained: “If it isn’t possible to complete the sale prior to April 5, 2025, there is one transitional rule which may help. If the business ceases trading before the date, BADR will still be available if you sell the property within three years of the cessation.”
Saint & Co provides tax and accounting services to thousands of businesses, individuals, charities and organisations from its multiple offices across Cumbria and Dumfries & Galloway in Scotland.
For further information about Furnished Holiday Lets and changes to the Capital Gains Tax rules, contact 01228 534371.
