Second sitting of the Public Bill Committee’s debate on the Finance Bill

The second sitting of the Public Bill Committee’s debate on the Finance Bill resumed where it had left off – discussing the abolition of the furnished holiday letting (FHL) regime (clause 25).

On the boundaries between trading and property income James Murray exchequer secretary to the Treasury said there were established principles that underlined what was trading and what was income from property. The proposed bright-line tests would distort rather than clarify these. Whether profits were classified as property income depended on the ‘nature of the activity undertaken and specifically how the profit is derived’. If it was from land exploitation it was property income. The FHL regime included specific reliefs but it was always property income not trading income. Categorising some property income ‘arbitrarily as trading would give more reliefs than FHLs previously had’.

Mr Murray reassured the committee that HMRC has...