Holiday lets ‘free-for-all’ over as HMRC cracks down

HMRC has stepped up the pressure on the holiday lets sector in a new tax crackdown.

The move by the Government’s tax body follows a large increase in investment since the Covid pandemic.

Big jump

A Freedom of Information request by the Daily Telegraph reveals that HMRC started nearly 2,000 enquiries during 2023-24.

This figure represents a big jump from 375 the previous year and 95 in 2021-22. HMRC says it is chasing holiday lets homeowners who are failing to declare income from rent.

Priced out

The Government is aware that in some areas one in 10 homes are not owned by local people, and they are being priced out of the market.

Following Chancellor Jeremy Hunt’s decision to abolish tax relief on Furnished Holiday Lettings in the recent Budget, things have become bumpy for vacation let investors.

Never considered exiting

The Holiday Letting Outlook Report 2024 which analyses Sykes Cottages’ revenue data and booking figures, showed that 65% of holiday homeowners are worried about the recent changes introduced to the sector, with increased taxes causing the most concern.

However, according to a poll of 500 UK homeowners commissioned for the report, the majority (86%) of holiday let owners have never considered exiting the market.

Half of owners are even contemplating buying another holiday let in the future regardless of tax changes.

It’s our role to ensure owners pay the right tax.”

An HMRC spokesman told the Telegraph: “The short-term property rental market is growing fast and it’s our role to ensure owners pay the right tax, creating a level playing field for all.

“We have dedicated specific resource to opening enquiries where there is evidence that those renting out holiday lets have not declared income.”