If you are thinking of selling your furnished holiday property, it might be worth considering the timing of the sale and if this isn’t possible before 5 April 2025, whether its worth ceasing to trade before 5 April 2025. It might save you quite a bit of tax to consider the timing.
If you sell the property prior to 5th April 2025 you may be eligible for Business Asset Disposal Relief (BADR) and will pay CGT at 10% on the gain HOWEVER the furnished holidays let rules change on 6 April 2025.
On 6 April 2025 the furnished holiday (FHL) rules cease and the normal CGT rates at 18% (lower rate) / 24% (higher rate) apply.
So, if you are wanting to sell your FHL, where you can, it would be worth getting a sale agreed and completed prior to 5 April 2025 to minimise the tax payable.
If it isn’t possible to complete the sale prior to 5 April 2025, there is one transitional rule which may help. BADR will still be available where the business ceases before 5 April 2025. This applies when the disposal is within three years of cessation where the FHL used in the business for two years prior to cessation and the cessation is before 5 April 2025.
So, basically, if you don’t sell and complete before 5 April 2025, you can still get the 10% tax if you cease trading before 5 April 2025 and sell within 3 years.
Please note there will be CGT to pay and return to complete and file with HMRC within 60 days of the sale of the property.
If you would like us to look at your specific circumstances and estimate the capital gains tax you will pay, or if a sale has been agreed the actual capital gains tax payable, please do not hesitate to contact us.
Lindsay Farrer
Partner
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