With the raft of changes, not only in tax, but to general legislation, is owning a buy-to-let or furnished holiday let property still a feasible option?
As an accountant, I’ll concentrate on the tax angle. So, to recap the last few years, what tax changes have impacted landlords?
- Increased stamp duty on second houses
- Removal of higher rate tax relief on mortgage interest
- Removal of the wear and tear allowance
- Abolition of multiple dwellings SDLT relief
- Abolition of furnished holiday letting regime
All of the above have not been helpful to landlords, who have been left feeling rather demonised, despite the need of rental properties. The last two items listed above are the most recent, the removal of the furnished holiday letting regime probably being the most relevant in our area. This change takes place from 5th April 2025, in effect means owners of such properties will not be able to claim tax deductions as they did before and probably pay more capital gains tax when the holiday let property is sold. These changes won’t impact all holiday lets as they would have needed to qualify as a furnished holiday let in the first place. Each property needs separate consideration. Maybe it is worth considering selling your holiday let?
If you own a buy-to-let property or a holiday let and want to know how any of the above changes impact you, please drop me a line, but to go back to my own question, is it still worthwhile?…. My thought is to not let the tax tail wag the dog. If it makes commercial sense, i.e. a good return or a good long-term investment, then yes, it’s still worthwhile. Don’t let tax reliefs (or rather lack of) deter you.