Qualifying period for FHL & CGT reliefs before April 6th 2025?

In January last year (2023) after my wife's passing I asked my son if he would set up our holiday home as a FHL. He and his wife started work on the following month (a big task as we'd had it for may years as a second home). It was advertised from July with first bookings in Augst of last year. July to July (1st year of trading?) met the FHL criteria. This tax year April 6th 2024 to April 5th 2025 will also have met FHL eligibiity. The new FHL tax regime comes in April 6th 2025. But am I right in thinking that on precisely April 5TH 2025, the property will have met FHL requirements - 2 eligible years (the first being the 12 months from first booking, the 2nd year the current tax year)... and as one HMRC representative said on here, the "ownership" of the business was from the decision to turn it into a FHL/when work started to make that happen? - so that would also meet the 2 years of ownership? If so, were I to make a gift of the second home to my son, exactly on April 5th 2025 (so, on the day itself that it would hopefully qualify, but not the day after when the new tax regime starts), that that gift would then meet the criteria for either BADR or CGT holdover relief, and that could then be claimed after? I realise the timing is tight but from what I've read from advisors on here suggests this might be the case, so worth asking!

Further to the previous post... if the actual *decision* was made at the end of January 2023 to turn it into a FHL, and work began on it from that point, would that be the start of a 2 year period? IE if passing the property on to my son end of January, it would have been owned as a business for 2 years by then? With first year of letting (august 23 to august 24) satisfied the 3 requirements for FHL, as well as the last year of trading (Jan 24 to Jan 25 - up to the point of disposal) ?

Hi Ari Silver,
As we are still awaiting draft legislation on any changes to FHL taxation / reliefs and that we can’t provide financial planning advice.
For advice on FHLs please refer to HS253:
HS253 Furnished holiday lettings (2024)
For Business Asset Disposal Relief helpsheet HS275:
HS275 Business Asset Disposal Relief (2024)
And for holdover relief helpsheet HS295:
HS295 Relief for gifts and similar transactions (2024)
Thank You. 
 

Thank you for the reply. Regarding the current tax rules though, could you confirm if the following is correct? "In the case where an individual has one property that is let as a holiday let and decides to stop letting and sell the property, relief will be available where: 1. the property was used as a FHL at the time that the FHL business ceased; 2. the business was owned by the individual making the disposal for a period of two years immediately prior to the cessation of the business; and 3. the disposal takes place within three years of the cessation." - where selling the property can also be where it is gifted, and where the criteria for 1.) is that it meets all FHL requirements in the year up to that selling or gifting?

Hi Ari Silver,
As we are still awaiting draft legislation on any changes to FHL taxation / reliefs and that we can’t provide financial planning advice.
For advice on FHLs please refer to:
HS253 Furnished holiday lettings (2024)
For BADR helpsheet HS275:
HS275 Business Asset Disposal Relief
And for holdover relief helpsheet HS295:
HS295 Relief for gifts and similar transactions (2024)
Thank you. 

Hi,
FHL income is declared in the property section (SA105 - Self Assessment: UK property (SA105) EnglishCymraeg).  
If you disposed of the property, for more than you acquired it for, there is a gain.  
This is declared in the capital gains section (SA108 - Self Assessment: Capital gains summary (SA108)).  
You should look at the guidance on business asset disposal relief, to confirm if this applies.  
More information can be found in the capital gains summary notes and at CG364045 (CG64045 - Business Asset Disposal Relief: disposal of assets after cessation of business).
Thank you.

Thanks - the guidance doesn't explain when the FHL business began though, for the 2 year BADR criteria. One HMRC rep on here said it's from when the deision was made/work began to turn it into a FHL. Is that correct?

Hi, 
Please refer to CG63975 - Business Asset Disposal Relief: qualifying disposals by individuals - HMRC internal manual
Thank you.