Why abolishing the furnished holiday lettings tax regime will punish local economies

Abolishing the furnished holiday lettings (FHL) tax regime will punish local economies, the CLA has warned.

It comes as the government publishes draft legislation to remove the FHL scheme from April 2025.

In the spring budget, then-Chancellor Jeremy Hunt announced that the government planned to abolish the tax support, FHL tax regime reductions currently apply to properties which are available for holiday letting for at least 210 days a year, and which are let for at least half that time.

It is thought scrapping the holiday lettings relief is expected to save the Treasury about £245m a year by 2028-29.

Country Land and Business Association President Victoria Vyvyan said:

“For many farmers and landowners, diversification into the holiday lettings market is a business necessity. The short-term rental and holiday let sector contributes billions to the wider economy, supporting local shops and restaurants and creating tens of thousands of jobs. Abolishing the Furnished Holiday Lets regime will only punish people who are helping to grow local economies.

“It is far from a tax loophole, providing a crucial support mechanism, strengthening the resilience and viability of many rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation.

“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality.