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The current tax benefits for the letting of properties as short-term holiday lets (known as Furnished Holiday Lets – FHL) is to be abolished from April 2025. The changes will take effect on or after 6 April 2025 for Income Tax and for Capital Gains Tax and from 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains.

The changes will remove the tax advantages that current FHL landlords have received over other property businesses in four key areas by:

• applying the finance cost restriction rules so that loan interest will be restricted to basic rate for Income Tax;
• removing capital allowances rules for new expenditure and allowing the replacement of domestic items relief;
• withdrawing access to reliefs from taxes on chargeable gains for trading business assets;
• no longer including this income within relevant UK earnings when calculating maximum pension relief available.

After the repeal, properties previously classified as FHLs will be integrated into the individual's UK or overseas property business and will be governed by the same rules as non-FHL property businesses.

An anti-forestalling rule also prevents individuals from gaining a tax advantage by entering into unconditional contracts to claim capital gains relief under the current FHL rules. This provision applies from 6 March 2024, the date the measure was first announced.

The removal of the special tax regime for holiday lets is expected to have a significant impact on many involved in the short-term holiday rental market in the UK.

The limit on Income Tax reliefs has applied since 6 April 2013. This measure was the first time a limitation to existing reliefs had been introduced.

The cap is set at the greater of 25% of income or £50,000. This limit applies to the total amount of relevant reliefs claimed in a tax year and is calculated individually for each tax year in which relief is claimed.

The main reliefs subject to this limit are:

• trade loss relief against general income and early trade losses relief claimed on the self-employment, Lloyd’s underwriters or partnership pages;
• property loss relief (relating to capital allowances or agricultural expenses) claimed on the UK property or foreign pages;
• post-cessation trade relief, post-cessation property relief, employment loss relief, former employees deduction for liabilities, losses on deeply discounted securities and strips of government securities claimed on the additional information pages;
• share loss relief, unless claimed on Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) shares claimed on the capital gains summary pages; and
• qualifying loan interest.

The limit applies in addition to other provisions that restrict the amount of relief that can be used to reduce total taxable income for the year. The limit does not affect the amount of trading losses which may be claimed against capital gains.

HMRC’s guidance explains, with supporting examples, how the limit is calculated, the measure of income used to calculate the limit, which reliefs are subject to the limit, and how different circumstances are treated. As the 2024-25 tax year begins to draw to a close, taxpayers should seek to ensure that wherever possible, they structure their finances to avoid the cap.

If you believe you have overpaid tax to HMRC, you can typically claim a tax refund for the excess amount. The process for making a claim varies depending on factors such as whether you submit a self-assessment return and how much time has passed since the tax was overpaid.

According to HMRC you may be able to claim a refund if you have paid too much tax on:

• pay from a job
• job expenses such as working from home, fuel, work clothing or tools
• a pension
• a self-assessment tax return
• a redundancy payment
• UK income if you live abroad
• interest from savings or payment protection insurance (PPI)
• income from a life or pension annuity
• foreign income
• UK income earned before leaving the UK

An online tool to help assist in claiming a tax refund is available at https://www.gov.uk/claim-tax-refund/y

Claims can usually be backdated for up to four years after the end of the tax year. This means that claims can still be made for tax refunds dating back as far as the 2020-21 tax year which ended on 5 April 2021. The deadline for making claims for the 2020-21 tax year is 5 April 2025.

If you need any assistance in making a claim for overpaid tax, we are here to help.

It was announced as part of the Autumn Budget measures that the government will not now proceed with the reform to base the High Income Child Benefit Charge (HICBC) on household incomes.

To make it easier for all taxpayers to get their HICBC right, the government will allow employed individuals to report Child Benefit payments through their tax code from 2025 and pre-prepopulate self-assessment tax returns with Child Benefit data for those not using this service.

The income threshold at which HICBC starts to be charged has been set at £60,000 since 6 April 2024. The charge is calculated at 1% of the full Child Benefit award for every £200 of income between £60,000 and £80,000. For taxpayers with income above £80,000 the amount of the charge is the same as the amount of Child Benefit received. The HICBC therefore either reduces or removes the financial benefit of receiving Child Benefit.

Claims can be easily made through the HMRC app or online, and new claims are automatically backdated for up to 3 months or to the child’s birth date if later.

Taxpayers can choose whether to continue receiving Child Benefit and pay the tax charge or opt to stop receiving it and avoid the charge. It is usually beneficial to claim Child Benefit as doing so can safeguard certain benefits and ensure your child receives a National Insurance number.