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UK associations warn of impact of FHL Budget announcements

UK: Short-term rental industry associations advocating for the sector have warned of the impact of scrapping tax relief for holiday lets, which was recently announced by the government as part of its Spring Budget 2024.

The UK Short Term Accommodation Association [STAA] has warned that the changes to the tax treatment for furnished holiday lets [FHLs] announced by the UK Government will force the closure of “hundreds” of businesses around the UK.

Andy Fenner, CEO of the STAA, said: “Plans to change the tax treatment for furnished holiday lets have sent shockwaves through the industry and are likely to force the closure of hundreds of small businesses.

“Now the dust has settled on the announcement, it’s no exaggeration to say that there is real fear out there. We urge the government to reconsider before irreversible changes are inflicted on a sector that has been hit by so much already.

“From planning reform, to licensing and registration schemes, the disruption and extra cost pressure the industry has already been asked to endure has felt endless. Against this backdrop of near-constant uncertainty, the latest proposals are a step too far.

“Some of these businesses will be single properties, others portfolios that support dozens of jobs. Many of them will be small businesses that have been built up over decades, sometimes involving multiple generations of family owners.

“What has been proposed will tear up a playing field that has been largely responsible for turning the holiday let industry into one of UK tourism’s crown jewels. If we move the goalposts, many of these businesses could be rendered unviable overnight,” he added.

Meanwhile, the Professional Association of Self-Caterers UK [PASC UK] and The Association of Scotland’s Self-Caterers [ASSC] have pushed back against the abolition of FHL allowances by the Chancellor [Jeremy Hunt] in the recent Budget announcement.

After the government voted through the Budget, which included the abolition of the FHL regime, over 11,000 UK businesses have written to their MPs to explain the scale of the impact on them.

PASC UK also sent a letter, signed by members of the self-catering business sector, representing 112,000 small businesses, to the Chancellor, requesting an urgent meeting to express “very deeply held” concerns about the further “attack” on the sector. The business owners and properties affected provide quality affordable holiday accommodation and form the basis of a year-round sustainable visitor economy.

Alistair Handyside MBE, chair of PASC UK, said: “This measure threatens the very fabrics of rural and coastal communities, quality holiday letting business provide the bed stock that supports local jobs and trades whilst enabling visitors to spend in our local communities, meaning that pubs, restaurants and visitor attractions remain viable, and in turn create jobs and assets for local communities. This attack has hit the wrong target, the businesses affected must apply a high threshold to meet the FHL criteria.

“The cost for these businesses having to transfer by law to another tax regime will be unsustainable for many,” he added.

Fiona Campbell, CEO of the ASSC, said: “The abolition of the Furnished Holiday Lettings [FHL] tax regime by the UK Government is the last thing the beleaguered and hard-pressed Scottish self-catering sector needs at the present time.

“In recent years, our sector has been hit by the Scottish Government’s onerous and burdensome short-term let licensing and planning regulations so the UK Chancellor’s Budget announcement on FHL spells yet more dispiriting news for a crucial component part of the Scottish tourism industry. Self-catering businesses should not be seen merely as a quick revenue source by the UK Government, but instead as a vital, valued and integral part of our vibrant tourist market.

“The sector provides huge economic benefits for local economies and local communities and must be supported by government rather than being used as a convenient scapegoat for wider failures in housing policy,” she added.

Ben Edgar-Spier, head of regulation and policy at Sykes Holiday Cottages, said: “The government should look at policy interventions to bring the 1.5 million empty homes in the UK back into use, which, unlike FHL, contribute nothing to local economies. They could also raise revenue by taxing those that remain empty more heavily.

“There are nearly 12 times more empty homes than properties that fall within the FHL regime. Equally a £200 tax per empty home would be enough to match the Chancellor’s £300 million estimate of the revenue raised by abolishing the FHL regime.

“We are urgently pressing for a meeting the Chancellor and officials to explain the real impact of this measure and to suggest ways to mitigate both the impact on business and the wider visitor economy,” he added.

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