PIM4170 - Repeal of Furnished Holiday Lettings rules : Commencement and qualifying tests (IT and CT) for 2024-25
The furnished holiday lettings rules cease to apply in tax years commencing on or after 6 April 2025 for Income Tax and for Capital Gains Tax, and 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains. See also PIM4100. This is subject to Royal Assent.
Period to which the occupancy conditions are applied: IT Cases
For a continuing let, apply the teststo the tax year, that’s from 6 April one year to the 5 April the next.
For a new let, apply the tests to the first 12 months from when the letting began.
When the letting stops, apply the tests to the 12 months up to when the letting finished.
The relevant period can extend beyond 5 April 2025 for lets that commenced during the 2024-25 tax year.
Example
A property is acquired on 1 December 2024 and is let furnished on a commercial basis from 1 January 2025. To determine whether the letting qualifies for 2024-25 the tests are applied to the period from 1 January 2025 to 31 December 2025.
Period to which the occupancy conditions are applied: CT cases
For a continuing let, the 12 months ending with the last day of the accounting period,
At commencement, 12 months beginning with the date in the accounting period on which it was first let,
On cessation, 12 months ending with the date in the accounting period on which it ceased to be let.
Example
A property is acquired on 1 October 2024 and is let furnished on a commercial basis from 1 November 2024. To determine whether the letting meets the occupancy conditionsfor the AP ending 31 March 2025 the tests are applied to the period from 1 November 2024 to 31 October 2025.
Averaging elections
If a customer lets more than one property as a FHL, and one or more of these properties doesn’t meet the letting condition of 105 days, they can elect to apply the letting condition to the average rate of occupancy for all the properties let as FHLs. This is called an averaging election.
Averaging elections will continue to be available for the tax year 2024-25 and the relevant period for new lettings in this period are as described above.
Period of grace elections
A customer may genuinely intend to meet the letting condition, but was unable to. If this happens, they may be able to make a period of grace election that allows the property to qualify as a FHL as long as the pattern of occupation and availability conditions were met(see PIM4110).
Period of grace elections will continue to be available for the tax year 2024-25 and the relevant period for new lettings in this period are as described above.