Business Asset Disposal Relief FHL

When selling a property which has been an FHL (before the changes in Apr 2025), Business Asset Disposal Relief applies if we have owned the business for more than two years. But what is the exact event which triggers the start of the two year ownership period? Due to sell a property which we have owned for more than two years, but it wasn't initially a holiday let. I first starting setting up as an FHL two years ago, but it didn't meet all three of the FHL criteria until more recently. Can I claim BADT on the basis that I started business activities relating to the FHL more than two years ago? Or is there a specific event such as meeting FHL criteria which triggers the start of the two year process?

Hi AMLF,
The same rules/criteria apply to FHL disposals for Business Asset disposal relief as for other qualifying disposals.
Please refer customer to HS275 Business Asset Disposal Relief (2024) - GOV.UK (www.gov.uk and CG63975 - Business Asset Disposal Relief: qualifying disposals by individuals - HMRC internal manual - GOV.UK (www.gov.uk).  
When the property became an FHL is a matter of fact. See PIM4110 - Furnished holiday lettings: qualifying tests for 2011-12 onwards (IT and CT) - HMRC internal manual - GOV.UK (www.gov.uk). For a new let, apply the tests to the first 12 months from when the letting began.
HS275 Business Asset Disposal Relief (2024).
Thank you.

Hi - I have already read all of the guidance you linked to, but those documents, in conjunction with your answer, still don't fully answer my question. Let me ask the question another way. Imagine first that I was disposing of another type of business, e.g. a jewellery shop. Attaching dates to this hypothetical business: If... - 1 Jan 2022 - started setting up the shop - 1 Feb 2022 - opened the shop - 1 Jan 2024 - sold the shop I assume in those circumstances, the disposal of the shop would be meet the 2-year criteria for BADR. Now looking at that with a holiday let example: - 1 Jan 2022 - started setting up the holiday let business - 1 Feb 2022 - opened the letting for bookings - 1 Mar 2022 - first actual booking - 1 Jan 2023 - reached the FHL criteria for the first 12 months, so now qualifying as an FHL - 1 Jan 2024 - sold the FHL So my question is - in the above example, would the disposal of the business also qualify for BADR in terms of the 2-year rule? If equivalent to the jewellery shop example, the answer would be yes. But your previous answer seems to suggest that the two year rule applies from the date of FHL qualification? Is that the case? In which case, in that example, what date would the business need to be sold after in order to meet the 2 year criterion for BADR?

Hi AMLF

We cannot comment on scenarios, we can only provide general information/guidance in this forum.  
For an answer to a detailed question of this nature, you would need to contact our self assesment helpline on 0300 200 3310 or seek professional advice.

Thank you

Hi - I don't really need to you to comment on the specific scenarios, all I need is a clear definition of what constitutes 2 years of ownership of an FHL, because there are several possible start points that one could justifiably measure from. Nowhere in the guidance documents does this seem to be clearly defined. I have already spent hours in the call queue for the CGT help line, so that's why I'm asking on the forum. If no specific definition exists, does that mean that we can choose which start point to use, as long as it is justifiable? Thanks

Hi,

It will be the date from which you decided that it was to be a fhl, that could be the date purchased or, if previoulsy let, the date the last tennant moved out for the property, to have a change of purpose. You can see further guidance here:

HS253 Furnished holiday lettings (2024)

Thank you.

Ok, thank you for clarifying .

Feedback  .

Hi, We've run a Furnished Holiday Let since 2018, using a commercial lettings agent, and qualified as an FHL . Now in the process of considering a sale, as received a cash offer for £360,000. 1)Can we claim Business asset disposal relief? 2) House was a new-build (costing ~£150 K), on land we already owned. For the purpose of CGT, how we put a 'value' as a cost of building for this land? Our fear is paying CGT on £210,000! (and only finding this out after the sale has gone through).

Hi ,
 

Yes you can claim BADR. As you state the house cost 150k to build, this is your purchase price. as you already held the land, you will need to try and obtain a value for the piece of land the property is on to then add that to the cost of the build for the overall purchase price  . Thank you .

Can we check please our position on the sale of a furnished holiday let and business asset disposal relief, BADR. We have met all the HMRC requirements for FHL. With the tax changes for FHL starting from 6/4/25, if we cease trading on 5/4/25 with the intention of then selling the property, do we still have BADR available to us provided we complete a sale of the property within 3 years, i.e. by 5/4/28? Thank you

We should have been explicit with our question of 30/10/24 that in the circumstance outline the BADR would be at 10%? thank you

Hi ,
 

Please refer to : Business Asset Disposal Relief    .

Thank you .

I am also interested in the answer to Aberdovey Burberry's question and remain confused about this despite reading the Business Asset Disposal Relief helpsheet. Could you therefore please clarify whether, if I cease trading on 5 April 2025 and try to sell my property, I will be eligible for BADR at 10% provided I sell withing the 3 year period or would it rise to 14% then 18% in April 26. Or does the 10% BADR just apply to properties' who have exchanged contract to sell prior to 6 April 2025 provided the sale is completed withing the 3 years.

To clarify my question, is it correct that the BADR increase to 14% in April 2025, and then to 18% from 6 April 2026 will not impact FHL? Providing FHL owners cease business within the 2024 -2025 tax year and sell the property within three years, the 10% rate will still apply?

Hi,
The following guidance states where the FHL ceased trading prior to 5 April 2025, BADR may still apply to a disposal within the normal 3 year period.
Furnished holiday lettings tax regime abolition
The guidance below further clarifies the capital gain and anti-forestalling rules. 
Clarification on abolition of the furnished holiday lettings tax regime
Thank you.

Thank you for this but since the date is absolutely critcal to this, when you say "where the FHL ceased trading prior to 5 April 2025, BADR may still apply to a disposal within the normal 3 year period" - am I right in that the date is actually ON or BEFORE 5 April 2025 please? Thank you

Hi,
Yes, you are correct the date is on or before 5 April 2025. As set out in the detailed proposal section of the following guidance, the measure comes into effect on or after 6 April 2025. 
Abolition of the furnished holiday lettings tax regime
Thank you.