Rural advocates have expressed concern that abolishing the Furnished Holiday Lettings (FHL) tax regime will negatively impact diversified farming businesses.

This follows the Labour government's release of draft legislation aiming to end the FHL scheme from April 2025.

Currently, the FHL tax relief applies to properties available for holiday letting for at least 210 days a year, with actual lettings for at least half that time.

Ending the FHL relief is expected to save the Treasury around £245 million annually by 2028-29.

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However, the Country Land and Business Association (CLA), which represents thousands of farmers, argues that many rely on the holiday lettings market as a ‘business necessity’.

The CLA highlighted that the short-term rental and holiday let sector contributes billions to the broader economy, supports local businesses, and creates thousands of jobs.

"Abolishing the Furnished Holiday Lets regime will only punish people who are helping to grow local economies." warned CLA president, Victoria Vyvyan.

“It is far from a tax loophole, providing a crucial support mechanism, strengthening the resilience and viability of many rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation.

“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality."

She questioned: “Why are small rural businesses being punished for diversifying? This sweeping approach needs a far closer scrutiny of the perceived problem.”