UK Government Abolishes Property Tax Reliefs and Lowers Higher Rate Property Capital Gains Tax in Budget 2024

During the Budget 2024 announcement, Chancellor Jeremy Hunt revealed plans to eliminate specialist tax rules for furnished holiday let properties and multiple dwellings relief.

The furnished holiday lettings (FHL) regime, providing tax reliefs for costs associated with holiday lets, will be abolished by April 2025. Additionally, multiple dwellings relief, a stamp duty relief for buyers purchasing more than one property, will cease from June 1st, 2024. The government claims that this relief has not effectively promoted investment in the private rented sector.

Scrapping these reliefs is estimated to save the Treasury £245 million and £385 million per year, respectively. Moreover, the higher rate of property capital gains tax (CGT) will be reduced from 28% to 24%, aiming to increase revenues by stimulating more transactions.

Industry reactions vary, with some welcoming the CGT reduction for potentially boosting the buy-to-let market and improving returns for investors. However, others express concerns, such as Kate Davies from IMLA, who believes that the reduction in CGT offers limited support to landlords grappling with economic challenges and a punitive tax system.

Additionally, the removal of furnished holiday lettings tax regime could generate around £300 million for other tax cuts, according to tax partner Stevie Heafford at HW Fisher. However, legitimate holiday let businesses, still recovering from the pandemic, may face further challenges.

Overall, opinions differ regarding the government's budget measures, with some stakeholders hoping for more substantial policies to support the property market and address housing supply issues.

Source: Financial Reporter