April 25, 2024


As expected, given the upcoming general election, the spring budget delivered many announcements on government spending and tax and national insurance giveaways. There were two key announcements which will impact rural businesses which are outlined further below, as well as some other notable announcements.

Furnished holiday lets

A major announcement is the planned abolition of the furnished holiday let (FHL) rules from 6 April 2025. This was aimed at delivering more housing, at a time where demand outweighs supply. However, it would seem Treasury failed to consider the impact of this on hospitality and rural businesses.

What this might mean for FHL businesses is covered in more detail in the next article by Kate Hardy. However, I should add, that there is much lobbying of government on this issue. In particular, in its review of property income; simplifying income tax for residential landlords, the Office of Tax Simplification (OTS) recommended a ‘brightline test’. If the FHL regime is abolished, the government should consider the boundary between trading and non-trading being more certain with the possibility of introducing a ‘brightline test’ to provide a clear test for when property letting activities would qualify as a trade. This could protect existing tax reliefs for qualifying genuine commercial holiday let businesses.

The OTS considered possible factors to be included in the ‘brightline test’’ such as:

  • a minimum number of properties let,
  • letting on a short-term basis,
  • no personal use of the property, and
  • a minimum level of hours per week necessary to be devoted to run the business.

Suffice to say we will be reviewing draft legislation as it is released and will provide an update when we know more.

Inheritance tax (“IHT”) – agricultural property relief (“APR”) and woodlands relief

The scope of the above reliefs will be restricted to property in the UK from 6 April 2024. Therefore, owners of agricultural land or woodlands in the EEA, Isle of Man or Channel Islands should take advice.

Following consultation, the government announced that, from 6 April 2025, the scope of IHT APR will be extended to land managed under an environmental agreement with, or on behalf of, the government, devolved administrations, public bodies, local authorities, or approved responsible bodies.

Further they will not restrict APR to tenancies of at least 8 years and they will establish a joint HM Treasury and HMRC working group with industry representatives to identify solutions that provide clarity on the taxation of ecosystem service markets where existing law or guidance may not provide sufficient clarity.

Further clarity will still be required on the above, and there remains the question as to whether such environmental activities will be enough to support a claim for business property relief for IHT purposes, and how these activities impact on the trading status of a business operating such schemes.

Other budget announcements

Other announcements impacting rural businesses included:

  • The main rate of Class 4 self-employed National Insurance will reduce from 8% to 6% from 6 April 2024 (having reduced from 9 to 8% from the same date in the autumn statement) saving up to £1,500 per individual a year.
  • The main rate of Class 1 employee National Insurance will reduce from 10% to 8% from 6 April 2024 having reduced from 12% to 10% from the same date in the autumn statement) saving up to £1,130 per individual a year.
  • From 6 April 2024, the high-income child benefit charge (“HICBC”) threshold will be increased from£50K to £60K, and it won’t be fully withdrawn until a person’s income is £80K. From 6 April 2026, the HICBC will be assessed on household income instead of an individual’s income. This might protect, on average,£1,260 of additional income for some families.
  • The capital gains tax rate on sales of residential property will reduce from 6 April 2024 from 28% to 24%. Clearly this is a measure, alongside the abolition of the FHL regime, to bring more residential property onto the market, encouraging sales of second homes.
  • Stamp duty land tax (SDLT) multiple dwellings relief will be abolished from 1 June 2024. This relief has helped reduce SDLT liabilities on farm purchases including more than one dwelling.
  • The VAT registration threshold will be increased from£85K to £90K from 1 April 2024.


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