Chancellor Jeremy Hunt has unleashed a crackdown on a lucrative tax scheme, axing the Furnished Holiday Lettings regime to bolster long-term housing availability and address the “distortion” in the property market.
Mr. Hunt, delivering a no-nonsense address, expressed concern that the tax incentives for holiday let landlords were exacerbating the scarcity of affordable homes for local residents. “This tax regime is creating a distortion, meaning there are not enough properties available for long-term rental by local people,” he asserted. “To make the tax system work better for local communities, I am going to abolish the Furnished Holiday Lettings regime.”
Holiday Let Landlords Lose Tax Relief Privileges
Under the abolished scheme, holiday let landlords could claim tax relief by renting their properties to holidaymakers for a minimum of 105 days annually. The Chancellor also scrutinized the Multiple Dwellings Relief, which bestowed stamp duty discounts on buyers of multiple properties in a single transaction. Mr. Hunt contended that this relief, designed to boost investment in the private rented sector, had failed its intended purpose and was prone to regular abuse.
Silver Lining for Landlords: Property Capital Gains Tax Slashed
Amidst the sweeping changes, landlords received a glimmer of positivity as the Chancellor announced a reduction in the higher rate of property capital gains tax from 28% to 24%. This move, endorsed by the Office for Budget Responsibility and the Treasury, aims to stimulate increased transactions and, subsequently, boost revenues.
In a cheeky aside, Mr. Hunt dedicated the property capital gains tax cut “for you, Angela,” directed at Labour deputy leader Angela Rayner in light of her recent controversies surrounding the sale of a council house.
Additional Budget Highlights: VAT Threshold Hike and Continued Support for Struggling Families
The Chancellor’s Budget was not short on noteworthy announcements. The VAT registration threshold for businesses is set to rise from £85,000 to £90,000 starting April, providing a financial breather for enterprises. Additionally, the government pledged to sustain the Household Support Fund (HSF) at its current level for an additional six months. Launched in 2021, the HSF aids families grappling with rising living expenses, channelled through local councils to support low-income households with essentials like food banks, warm spaces, and food vouchers.