Thursday 27th February 2025
A year ago in March (2024), the government announced new regulations that will result in Furnished Holiday Let (FHL) tax changes, effective from 6th April 2025 (1st April 2025 for limited companies).
The new legislation means that holiday let owners holding properties in their personal name will no longer be able to offset mortgage interest against profits.
Due to a compensating tax credit, this particular change will not affect the tax on most basic rate taxpayers, although owners will see taxable incomes rise by the value of their annual finance costs. Limited companies are not affected by the changes to the finance costs restrictions.
As a result, there is a growing trend towards buying or owning holiday lets via a limited company, driven by the appeal of tax advantages and reduced personal liability for holiday let owners.
One popular approach is transferring FHL properties from personal names into a limited company. This option offers benefits such as lower corporation tax rates and the ability to fully deduct mortgage interest.
Zeal have published a new guide which explores the key benefits of owning a holiday let in a limited company compared to owning as an individual. It also explores alternative business structures.
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