As we approach the 6th April 2025* deadline for the end of the Furnished Holiday Letting (FHL) tax classification, there are still a number of time-sensitive actions you can take to put yourself in the best possible position. Here’s a checklist of what ASSC members should consider over the next two weeks:
Capital Allowances
If you’re undertaking any capital works, ensure all relevant invoices are dated and issued before 6th April 2025. This is your final opportunity to claim capital allowances under the current FHL regime.
Selling Property
If you’re planning to sell an FHL property:
- Cease trading before 6th April 2025 to qualify for Business Asset Disposal Relief (BADR).
- Exchange of contracts before 6 April 2025 secures a 10% Capital Gains Tax (CGT) rate.
- After that, CGT will rise to 14% (before 6 April 2026) and 18% (before 6 April 2027).
Gifting Property
Thinking about passing a property on?
- Gifting before 6th April 2025 means you may be eligible for holdover relief, deferring CGT to the recipient.
- Alternatively, BADR could still apply (subject to meeting conditions), with CGT at 10% on the market value.
- Gifts are classed as potentially exempt transfers, and fall out of your estate after 7 years.
- If the property is mortgaged, redemption may be required. Be aware: any mortgage transferred will attract Stamp Duty Land Tax (SDLT).
Pension Contributions
After 6th April, FHL income no longer counts as relevant earnings for pension contributions.
- If you have no other qualifying income, act now:
- Maximise pension contributions by 5th April.
- Use carry-forward rules to take advantage of unused allowances from the past 3 years (if you earn over £60k this year).
National Insurance Contributions
Time is running out to fill gaps in your NI record, which could affect your State Pension.
- Log into your HMRC online account to check your NI history.
- Make voluntary contributions before 6th April.
- If you’ve already tried and struggled, the HMRC chat function is now more responsive, so try again now.
- If you’ve reached retirement age, contact the Pensions Service directly.
This is critical – don’t delay!
ISA Top-Ups
It’s the end of the tax year – now’s the time to top up your ISA before allowances reset.
Planning for the Year Ahead
Now is also the time to prepare for new income-sharing structures post-FHL. This may require changes from 6th April onwards.
Take advice from a tax specialist.
*from 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains