Property

Jointly owned holiday lets

The special tax regime for furnished holiday lettings (FHLs) came to an end on 5 April 2025. Under that regime, where the holiday let was owned jointly by spouses or civil partners, they could choose how to share the income between then and were taxed on the income they actually received.

Following the end of the FHL regime this is no longer the case. Furnished holiday lets are now treated in the same way as other residential properties and where the property is jointly owned by spouses or civil partners the default position is that each is taxed on 50% of the income, regardless of the amount that they actually receive and their underlying ownership share.

Where this does not give an optimal result, if the property is owned as tenants in common in unequal shares you can elect instead for the income to be allocated for tax purposes by reference to those shares by making an election on Form 17. Where it would be beneficial to change the underlying ownership, the no gain/no loss rules for spouses and civil partners mean that is it is possible to transfer a stake in the property from one spouse/civil partner to the other without triggering a capital gains tax bill.

If you jointly own a furnished holiday let, we can advise you whether a Form 17 election would be beneficial.

This newsletter deals with a number of topics which, it is hoped, will be of general interest to clients. However, in the space available it is impossible to mention all the points which may be relevant in individual cases, so please contact us for personal advice on your own affairs.