I’m a property owner – how will the changes to CGT and furnished holiday lettings tax affect me?

The Spring Budget brought many changes made by the Chancellor, including changes which would impact property owners.

The two main changes impacted:

It is important you understand these changes, when they come into effect and how you will be impacted so you can ensure you remain compliant with your tax obligations.

How is my CGT obligation changing?

As long as the property is not your main residence, any residential property you sell for a gain is liable for CGT.

Usually, residential property gains would be taxed at 18 per cent for gains that fall within the basic rate band and then 28 per cent thereafter.

However, from 6 April this year, the higher rate will be reduced to 24 per cent – this affects property sales that are exchanged on or after this date.

You need to submit property returns but you also need to be aware that any forms submitted from 6 April may still be required to use the 28 per cent rate if the sale was exchanged on or before 5 April.

This is due to the 60-day reporting requirement and is important to know so you are up to date with your tax obligations.

To remain compliant with your CGT obligation, you should:

When you complete the tax return, you need to show the disposal proceeds before any deductions.

After this, you can claim the cost of buying the assets and broker fees as allowable costs.

If you are a landlord, you will be able to benefit from the lower rate of CGT on property disposals if you choose to sell your property after 6 April.

This is due to the abolishment of the Furnished Holiday Lets preferential tax regime from April 2025 which is discussed below.

Will my furnished holiday letting be affected?

From 6 April 2025, the Furnished Holiday Lets preferential tax regime will be abolished.

As a result, your furnished holiday letting will be treated as a property investment business from 6 April 2025.

However, the decision to abolish this regime means the following tax benefits of being treated as a trade will be lost from 6 April 2025:

To help combat these changes, you will need to evaluate your business operations and ensure you are compliant with your tax obligations as a property owner.

If you would like to know more about the changes and how you will be affected, please get in touch with a member of our team today.

 

Cloud Accounting Experts

Xero Intuit QuickBooks Sage Dext

Latest Insights

Make an enquiry

Have a question? Contact us and a member of our team will get back to you.

If you would like to see full details of our data practices please visit our Privacy Policy and if you have any questions please email privacy@thomascoombs.com.

Awards and accreditations