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Unveiling Tax Breaks: FHL Prospects in Budget 2024

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TLDR:

  • The abolition of the furnished holiday lettings (FHL) regime will result in individuals operating FHL businesses losing key tax benefits.
  • This change will impact how FHL businesses are taxed and could lead to financial implications for those in this sector.
  • In the recent Budget 2024, the government announced the abolition of the furnished holiday lettings (FHL) regime, which will have significant implications for individuals operating FHL businesses. This change in tax legislation will result in FHL businesses losing several key tax benefits, leading to potential financial consequences for those in this sector.

    One of the key benefits that FHL businesses will lose as a result of this change is the ability to offset trading losses against other income. Currently, individuals operating FHL businesses can offset their losses against their other income, reducing their overall tax liability. However, with the abolition of the FHL regime, this tax benefit will no longer be available, potentially increasing the tax burden for FHL business owners.

    Additionally, the removal of the FHL regime will also impact how FHL businesses are taxed in terms of capital gains tax (CGT). Under the current regime, individuals operating FHL businesses can benefit from various CGT reliefs, such as entrepreneurs’ relief and rollover relief. However, with the abolition of the FHL regime, these CGT reliefs will no longer apply to FHL businesses, potentially leading to increased CGT liabilities for business owners.

    Furthermore, the abolition of the FHL regime could have wider implications for the tourism and hospitality sector. FHL businesses play a significant role in providing accommodation for tourists and visitors, and the loss of key tax benefits could impact the profitability and viability of these businesses. This, in turn, could have knock-on effects on the wider tourism industry and local economies.

    In conclusion, the abolition of the furnished holiday lettings (FHL) regime in the recent Budget 2024 will have significant implications for individuals operating FHL businesses. The loss of key tax benefits, such as the ability to offset trading losses and various CGT reliefs, could result in financial challenges for FHL business owners and impact the wider tourism and hospitality sector.

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