An accountancy firm is warning those using Airbnb and similar short let platforms that new tax rules mean they could lose out on thousands of pounds during holiday season.
The government has ended tax breaks for Furnished Holiday Lettings (FHL) following an announcement by Chancellor Jeremy Hunt during the March Budget.
The changes mean some types of tax reliefs and allowances will be abolished and FHL properties will be subject to the same rules as a long-term let.
Government officials have claimed the tax breaks given to FHL landlords had stopped residents from getting onto the property ladder.
Fears have also been growing that Britain’s holiday hotspots are facing housing problems during the off season with properties lying empty and local economies struggling.
Landlords who let out Airbnb or other FHLs will no longer benefit from tax advantages over landlords who let residential properties in a bid to help locals buy a home. Owners of FHLs will no longer be able to deduct the full cost of mortgage interest from their rental income.
Those operating as limited companies – or without mortgages – will not be as affected but have been advised to consult a tax expert to further understand the new rules, which come into force in April 2025.
Lee Murphy, managing director of The Accountancy Partnership, says: “With the abolishment of tax breaks for Furnished Holiday Lettings set to take effect from April 2025, it is vital property owners to seek guidance from accountants and tax advisers.
“Navigating the new rules can be complex and professional advice will be crucial for financial planning.
“There are a raft of changes that will affect many owners of holiday properties, particularly those who use Airbnb. Without professional guidance the transition could be difficult and lead to financial difficulty but this can be avoided by working with a tax expert.”