On 29 July 2024, the UK Government published draft legislation for consultation on the removal of the specific tax treatment for income and gains from furnished holiday lets (FHLs), effective from April 2025. We appreciate the opportunity to provide evidence on the proposed abolition of the FHL tax regime and express our significant concerns regarding its potential impacts. This submission follows our engagement with HM Treasury on 19th August 2024, where the ASSC and the Professional Association of Self-Caterers (PASC) presented the negative consequences this measure could have, not only on self-catering businesses but also on local economies throughout the UK. We welcome the opportunity to respond to this critical consultation.
The self-catering or holiday let sector plays a crucial role in supporting local communities across the UK. However, the tourism industry is still experiencing a slow recovery from the COVID-19 Pandemic and recent economic challenges. It is essential to avoid introducing measures that could destabilise this already fragile sector at such a critical time.
Traditional holiday lets are confronting unprecedented market challenges, compounded by an inconsistent approach to tax and regulation across all levels of government. This disjointed policy framework risks triggering a sharp decline in the sector. If the current approach continues, an overcorrection may occur, making it impossible to reverse the downturn in time.
We strongly urge the UK Government to reconsider the proposed abolition of the FHL tax regime. The pace of change is simply too rapid for the thousands of micro-businesses that have operated under this HMRC tax framework for up to 40 years. Transitioning to a new tax regime by April 2025 is a unrealistic expectation. Forcing these businesses out of the FHL regime will have immediate and severe consequences, many of which are unintended, yet will cause significant financial burden to businesses that cannot bear it.
Read the ASSC Submission: