OTHER MATTERS
Furnished Holiday Lettings The Furnished Holiday Lettings (FHL) tax regime will be abolished from April 2025. The effect of abolishing the rules will be that FHL properties will form part of the person’s UK or overseas property business and be subject to the same rules as non-furnished holiday let property businesses. This will apply to individuals, corporates and trusts who operate or sell FHL accommodation.
Consultations There were a number of tax-related consultations announced in the Spring Statement, including: • Clearances for the Research and Development tax reliefs, with the aims of reducing error and fraud, increasing certainty for customers and improving customer experience. • Modernising how HMRC acquires and uses third-party data to make it easier for taxpayers to get tax right first time. • Options to improve the financial penalties that apply when inaccuracies are found in returns and documents submitted to HMRC and where taxpayers do not meet their obligations to notify HMRC of circumstances that affect their tax liability. • Options to enhance HMRC’s powers and sanctions to take swifter and stronger action against tax advisers who facilitate non-compliance. The VAT registration threshold From 1 April 2025 the VAT registration threshold remains at £90,000 and the deregistration threshold at £88,000. Removal of VAT exemption for school fees
There are a number of implications from 2025/26 which are detailed below. Pensions - individuals will no longer be able to include this income within relevant UK earnings when calculating maximum pension relief. Dwelling-related loans - the amount of Income Tax relief landlords can receive on residential property finance costs is restricted to the basic rate of Income Tax of 20%. Replacement of domestic items - capital allowances will no longer be available for expenditure on new plant and machinery (subject to transitional rules) but instead businesses may claim relief on the replacement of certain items. Capital gains - the rules which allowed FHL to be treated as a trade for various Capital Gains Tax reliefs are withdrawn in relation to disposals made on or after 6 April 2025 (1 April 2025 for Corporation Tax). Roll-over relief on the replacement of business assets will no longer apply to acquisitions which take place on or after those dates. However, there are a number of detailed transitional rules to preserve certain reliefs such as Business Asset Disposal Relief in specific situations. Losses - broadly, any unused losses can be carried forward to set against future years’ profits of either the UK or overseas property business as appropriate.
Private school fees for education and vocational training will no longer benefit from VAT exemption and are subject to VAT at the standard rate (20%). The change applies to terms beginning on or after 1 January 2025 although certain prepayments made after 29 July 2024 are also included.
Disclaimer: Whilst we take care to ensure the accuracy of this document, no responsibility for loss incurred by any person acting or refraining from action as a result of this information can be accepted by the authors or firm.
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