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.

Struggling with unpaid invoices? If you've paid VAT to HMRC but never received payment from your customer, you may be able to reclaim that VAT. Learn how bad debt relief works and whether switching to cash accounting could ease your VAT woes.

The VAT bad debt relief provisions enable businesses to reclaim VAT that has been paid to HMRC when a customer fails to pay for goods or services within a reasonable period. This typically applies when an invoice has been issued, but payment has not been received for an extended period (usually six months after the due date).

Under standard VAT accounting procedures, businesses are required to account for VAT at the time an invoice is issued, regardless of whether payment has been received. However, businesses can claim bad debt relief if specific conditions are met.

The primary conditions for claiming bad debt relief, as outlined in HMRC’s guidance, include:

1. The VAT on the supply must have already been accounted for and paid to HMRC.
2. The debt must be written off in the business’s regular VAT accounts and transferred to a separate bad debt account.
3. The value of the supply must not exceed the usual selling price.
4. The debt should not have been paid, sold, or factored through a valid legal assignment.
5. The debt must remain unpaid for at least six months after the later of the payment due date or the supply date.

It is important to note that businesses using the cash accounting scheme, or those that use certain retail schemes, only account for VAT on the amounts they have actually received from customers. As such, businesses operating under these schemes are generally not required to make bad debt relief claims, as VAT is only paid once payment is received.

Small businesses experiencing significant issues with bad debts may find it beneficial to apply for the cash accounting scheme, as this can help mitigate VAT liabilities by deferring payment until the customer settles their debt.

Use a company car for personal trips? Avoid a hefty tax charge by reimbursing your employer for private fuel by 6 July 2025. It’s called “making good” – and it could save you a chunk in tax if your private mileage is low.

To avoid the car fuel benefit charge, an employee must "make good" the cost of all fuel used for private journeys no later than 6 July following the end of the relevant tax year. This means that the employee needs to reimburse the employer for any private fuel used during the 2024-25 tax year by this deadline to prevent any tax liabilities related to the fuel benefit.

When an employee is provided with fuel for private use in a company car, the default rule is that the employee is required to pay the car fuel benefit charge. This charge is calculated based on the car's CO2 emissions rating and is applied to the car fuel benefit multiplier. This has just increased to £28,200 for 2025-26 (2024-25: £27,800).

However, the car fuel benefit charge can be avoided if the employee repays the employer for all private fuel, a process known as "making good." Private fuel use includes fuel used for commuting to and from work.

By making good, HMRC will accept that no car fuel benefit charge applies, allowing the employee to avoid the income tax charge on private car fuel. Typically, it is more beneficial for an employee to reimburse the employer for the private fuel rather than pay the Income Tax charge, especially if private mileage is low.

If the employee does not demonstrate that they have repaid all fuel costs associated with private journeys (including commuting), the car fuel benefit charge will still apply. Therefore, it is crucial for employees to maintain accurate records of private mileage and ensure that all fuel costs for private use are fully repaid by the deadline to avoid unnecessary tax charges.