Another serious consideration at this point should be whether the property still serves the best purpose within the portfolio, or whether now is the time to sell.
As always, tax should not be the only driving factor behind any decisions, but if the commerciality of the venture was on a knife edge before these changes tip it the other way, then now may be the time to sell up and invest the proceeds in something more fit for purpose.
Certainly if landlords are considering selling their FHLs anyway, it is likely to be better to sell up in February and potentially secure a 10 per cent rate, rather than waiting until April when it could be 28 per cent.
Summary
As with any change in circumstances, the changes in tax legislation applying to FHLs will necessitate a review of the financial plan in place.
There is a chance to put some of these matters on the right path now, while the beneficial rules are still in place, but those with significant FHL businesses will need to carefully consider their ongoing strategy ahead of 2025 and give serious thought to alternative ways to structure their assets.
The above is all based on the changes we know about, but with a new government and a Budget in October with a deficit to fill, it may be all-change again before the end of the year, so make sure you are clear on your objectives and get the right advice in place early on.
Graeme Hills is head of tax at Duncan & Toplis
