The property landscape
If part of your wealth planning includes property, there are some changes that may affect you in the property landscape. The one most people have heard about is the change in stamp duty as it reverts to the pre-Covid levels after a 5 year reduction, but there are also changes in legislation in relation to furnished holiday lets (FHL).
Serviced accommodation has gained ground in the property world over the past decade, although not all serviced accommodation qualifies as a FHL. Up to 5th April 2025 for the following conditions must be met:
- The property must be situated in the UK or European Economic Area (EEA)
- The property must be furnished
- Commercially let out (intending to make a profit)
- Property must be available to commercially let out to the public for at least 210 days per tax year
- If let to the same person for more than 31 days, there should be no more than 155 days of consecutive occupation in that tax year
- The property must be rented out to the public for at least 105 days of the 210 days available. This does not include private or discounted use by friends and family.
If you own FHL properties as an individual, they will no longer be eligible for more beneficial capital allowances treatment. Instead, they will be eligible for ‘replacement of domestic items relief’ in line with other property businesses. The management of ongoing capital allowances will need to be carefully managed to ensure compliance.
| Current | After 5th April |
| A loss generated from a FHL property business can only be carried forward and utilised against future profits of that same FHL business. Losses generated from this FHL business can be carried forward and offset against future years’ profits. | Former FHL property losses will be able to be offset against the person’s UK or overseas property profits as appropriate and losses can be offset against profits from other property. |
| FHL properties are eligible for roll-over relief, business asset disposal relief, gift relief, relief for loans to traders, and exemptions for disposals by companies with substantial shareholdings. | Eligibility for the reliefs will cease — however, gift relief or rollover relief that has applied to FHL disposals previously the abolishing of the FHL regime will not result in the gift relief or rollover relief gains becoming taxable. |
If a FHL business has ceased pre 5th April 2025 as long as the property is sold within the 3 years prior to cessation Business Asset Disposal Relief (BADR) will apply.
Where an FHL is jointly owned between married couples and civil partners there is flexibility on how the profits are allocated each year. With the change in regulations all spouses and civil partners will be assessed for income tax equally, unless they hold the property as tenants in common and complete a form 17.
Form 17 cannot be dated before 6th April and this will need to be submitted to HMRC with a Declaration of Trust, within 60 days of the start of the new tax year.
If in doubt, do get professional advice to ensure you don’t end up falling foul of HMRC and having to pay fines or getting unexpected tax bills.
SDLT (Stamp Duty Land Tax) changes 1st April 2025
From 1st April 2025 the tax free threshold for individuals who are first time buyers will fall from £425,000 to £300,000.
Properties priced between £300,001 and £500,000 will incur a 5% stamp duty rate
The higher threshold for first time buyers will reduce from £625,000 to £500,000. Rates on purchases above £500,001 will be at the home owner rates.
If you already own your home and want to move, from 1st April 2025 you will pay 2% stamp duty on property valued between £125,001 and £250,000. Previously there was no SDLT on property up to £250,000.
For property priced between £250,001 and £950,000 a 5% rate will apply.
Currently, investors or purchasers who own more than one property pay a 3% stamp duty on properties priced up to £250,000. However, from April 2025, the 3% rate will only apply to homes priced up to £125,000. For property between £125,001 and £250,000 the rate is 5% and property between £250,001 and £925,000 the rate is 8%
SSAS and SIPP
If you run a company that owns a commercial property or you are looking to purchase a commercial property through your company, purchasing through a SIPP or SSAS could be a great tax efficient option.
A SIPP and a SSAS are a pension scheme. A SIPP is for an individual and a SSAS can have a number of members, which is ideal in a family-owned business or where there are several directors and key management.
There’s more about the SSAS scheme here.
If you have any questions regarding the changes in the property landscape and if they may affect you, then please get in touch and one of our expert team members will be able to help you.
