Key Dates and Actions for FHL Owners

There are several dates to note down

Claim Deadline: 31st January 2025

Individuals owning an FHL have until 31st January 2025 before losing First Year Allowances e.g. Annual Investment Allowance (AIA) against expenditure incurred in the 2023/24 tax year. Individuals also have until the 31st of January 2025 to claim under the current regime. This includes expenditures incurred in previous tax years (assuming a claim is available and possible). It’s crucial these deadlines are understood given the current landscape surrounding Capital Allowances relating to FHLs. Acting too soon may expose you to problems, given it has not yet been confirmed what happens to any remaining pool of Capital Allowances within tax returns after the FHL regime no longer exists.

Awaiting Detailed Rules and Guidance

Until the government publishes detailed rules and guidelines on how the abolition will be implemented. It may well be advisable for FHL owners to wait before making any significant financial decisions. The lack of clarity on the specifics of the abolition means that premature actions could lead to suboptimal financial outcomes.

However, if you are thinking, or in the process, of buying, selling, or renovating your property, we advise you not to wait and get in touch.

Company-Owned FHLs: Strategic Thinking

For FHLs owned within a company with fiscal year-ends in June, July, or August, immediate action may be required. Owners should consult with a specialist to determine if a claim should be made before the year-end. In order to avoid losing first-year allowances (this assumes costs have been incurred in recent/open tax returns). Post-year-end, the opportunity to claim these allowances may still be possible. However crystallising the tax benefit could take significantly longer, or even be lost given how the FHL sector is exposed to the legislation changes.

If a company year-end is after August, we would encourage clients to be patient and await confirmation of the intended rule changes. Again, if you are buying, selling, or about to renovate an FHL, please get in touch.

Strategic Tax Planning

Optimising remaining benefits under the FHL regime

If a claim is feasible within a company structure, it is important to carefully consider how the claim could be applied against taxable profits. Before the intended abolition of the regime in April 2025. However, this is dependent on the basis that the abolishment is still to take place. Given that there hasn’t been any further clarification on how it will be abolished. Strategic tax planning will be essential to optimise any remaining benefits under the FHL regime. However, this planning is complicated by the current lack of detailed information.

CARS team reviewing information

Moving Forward

The latest information now suggests that further guidance as to how the rules will apply will be published in the Autumn. Due to time factors caused by the recent dissolution of Parliament for the General Election. However, whilst we await further details from the government, it is crucial to stay informed. Plus, consider seeking professional advice to navigate this transition period effectively.

As the April 2025 deadline approaches, continued vigilance, and proactive financial planning will be key to mitigating the impacts of this significant policy change. FHL owners should remain in close contact with their tax advisors to ensure they make informed decisions and take necessary actions within the available time frame.

HM Revenue & Customs

If you require any further assistance, please don't hesitate to get in touch...

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