Author: Glenn

From April 2025, holiday lets lose their special tax treatment. Landlords must prepare for new Income, Capital Gains, and Corporation Tax rules. Here's what’s changing.

The repeal of the Furnished Holiday Lets (FHL) regime, a long-standing arrangement that offered tax advantages for individuals and companies letting out properties on a short-term basis, has now come into force. The removal of these benefits will affect both Income Tax and Capital Gains Tax from 6 April 2025, and Corporation Tax (including chargeable gains) from 1 April 2025.

These changes mean that properties previously classified as FHLs will now be treated as part of the individual's overall UK or overseas property business and will be subject to the same rules as non-FHL property businesses.

Under the previous regime, qualifying FHLs benefited from several tax reliefs that were not available to standard buy-to-let properties. These included the ability to claim capital allowances on furniture and fixtures and Business Asset Disposal Relief. With the repeal, these advantages will no longer apply.

Another important aspect of the reform is the removal of the FHL-specific exemption from the jointly held property rules. Under the new rules, income and gains from jointly owned holiday lets will by default be split equally between spouses or civil partners, unless:

• entitlement to the income and the property are in unequal shares; and

• spouses or civil partners have informed HMRC that their share of profits and losses is to match the share each holds in the property. This can be done using Form 17: Declare beneficial interests in joint property and income.

The new VAT road fuel scale charges applicable from 1 May 2025 to 30 April 2026 have been published. The changes amend the VAT scale charges for taxing private use of road fuel to reflect changes in fuel prices.

HMRC has released new VAT fuel scale charges effective from 1 May 2025. If your business provides fuel for private use, updated rates apply from your next accounting period. Here’s what’s changed.

The new fuel scale charges must be used by companies from the start of their next prescribed accounting period beginning on or after 1 May 2025. The fuel scale rates continue to encourage the use of cars with low CO2 emissions.

The revalorisation of fuel scale charges is no longer part of the Budget process, and the tables are instead published by HMRC annually.

Where the CO2 emission figure is not a multiple of five, the figure is rounded down to the next multiple of five to determine the level of the charge. For a bi-fuel vehicle which has two CO2 emissions figures, the lower of the two figures should be used. There are special rules for cars which are too old to have a CO2 emissions figure.

A school inspector dismissed for brushing water off a pupil’s head won his unfair dismissal claim against OFSTED.  Mr. Hewston worked as a Social Care Regulatory Inspector and, on the 8th of October 2019, during a school inspection, he brushed water off the head and touched the shoulder of a young boy who had been caught in a rainstorm. The school reported the incident to OFSTED as a case of ‘inappropriate touching’ in an 11-page letter.

Disciplinary proceedings were instituted, and he was summarily dismissed for gross misconduct, despite his hitherto immaculate disciplinary record. Throughout the disciplinary process, Mr. Hewston maintained that his conduct was appropriate, even though he would not have done it again due to the trouble it had caused him. Mr. Hewston brought proceedings against OFSTED for both unfair and wrongful dismissal, both of which were dismissed. However, he successfully appealed at a tribunal, which found that the claimant had been unfairly dismissed, as OFSTED did not have a policy in place prohibiting physical contact with a child, nor any disciplinary rules defining touching as gross misconduct.

Section 94 of the Employment Rights Act (ERA) 1996 gives employees the right not to be unfairly dismissed, and the absence of published guidance or disciplinary rules on physical contact is dispositive. Indeed, the lack of any such guidance would result in the claimant not knowing that what he was doing was “so seriously wrong as to justify dismissal”.

The decision also makes it clear that a person cannot be dismissed because they did not show the ‘right’ reaction and insight during a disciplinary hearing. The fact that Mr. Hewston would never act the same way because of the trouble it caused him, rather than because he admits his action was ‘wrong’, is irrelevant; the salient point being that he would not do it again.

Employers must ensure that they have the right guidance and policies in place if a certain form of conduct is deemed inappropriate in their field; otherwise, any subsequent dismissal could be regarded as unfair. Your employees must be able to know what behaviours are reasonably expected from them.

Redundant? You could receive up to £30,000 tax-free, whether it’s statutory pay or a better deal from your employer. Know your rights, check the 2025-26 limits, and understand how your age and service affect your payout.

There is a tax-free threshold of £30,000 for redundancy payments, regardless of whether the payment is your statutory redundancy pay, or a more generous amount offered by your employer.

If you have been employed for two years or longer and are made redundant, you are typically entitled to redundancy pay. The legal minimum you are entitled to receive is known as "statutory redundancy pay." However, there are exceptions to this entitlement, such as if your employer offers to retain you in your current role or provide suitable alternative employment, and you refuse the offer without a valid reason.

The amount of statutory redundancy pay is determined by your age and length of service, and is calculated as follows:

• Under 22: Half a week’s pay for each full year of service
• Aged 22 to 40: One week’s pay for each full year of service
• Over 41: One and a half weeks’ pay for each full year of service

If you were made redundant on or after 6 April 2025, your weekly pay is capped at £719. A maximum of 20 years of service taken into account. The maximum statutory redundancy payment for the tax year 2025-26 is £21,519.

Employers may opt to offer a higher redundancy payment, or you may be entitled to an increased amount based on the specific terms outlined in your employment contract.

Swapped an old fridge or carpet in your rental property? Landlords can claim tax relief on replacing domestic items – but not if it's an upgrade! Know the rules and save money by claiming what you are entitled.

The replacement of domestic items relief allows landlords to claim tax relief when they replace movable furniture, household appliances, and other domestic items in a rental property. This relief is available for various items, including free-standing wardrobes, carpets, curtains, televisions, fridges, and crockery.

The amount of the deduction depends on several factors:

• The cost of the new replacement item, which is limited to the cost of an equivalent item if it represents an improvement over the old one (i.e., beyond the reasonable modern equivalent); plus
• the incidental costs associated with disposing of the old item or acquiring the replacement; minus
• any amounts received from disposing of the old item must be deducted from the total claimable amount.

A key aspect of this relief is distinguishing between a "replacement" and an "improvement." If the new item is deemed an improvement over the old one, the allowable deduction is limited to the cost of purchasing an equivalent item of similar type and function.

HMRC’s internal guidance provides an example highlighting the fact that a brand-new budget washing machine costing circa £200 is not an improvement over a 5-year-old washing machine that cost around £200 at the time of purchase (or slightly less, considering inflation).

If the replacement item is a reasonable modern equivalent, such as replacing an old fridge with a new energy-efficient model, this would not be considered an improvement, and the landlord can claim the full cost of the new item under the relief.

This relief helps landlords offset the costs of maintaining and upgrading rental properties, provided the replacement is for an equivalent item rather than an enhanced or more expensive upgrade.