What Is a Furnished Holiday Letting?
A Furnished Holiday Letting (FHL) is a property that meets specific qualifying conditions for short-term holiday lets. Historically, FHLs were treated as a trade for certain tax purposes, giving them advantages over normal rental properties.[1]
Qualifying Conditions
To qualify as an FHL, a property must meet all three conditions in the tax year:[1]
- Availability condition: Available for commercial holiday letting for at least 210 days
- Letting condition: Actually commercially let for at least 105 days
- Pattern of occupation: Not occupied by the same person for more than 31 consecutive days for more than 155 days total
Tax Advantages (Pre-April 2025)
FHLs that met the conditions received several tax benefits:[1]
- Capital allowances on furniture, equipment, and fixtures[3]
- Loss relief — FHL losses offset against future FHL profits
- Business Asset Disposal Relief on sale (10% CGT rate up to £1m)[4]
- Profits counted as relevant earnings for pension contributions
- Rollover Relief and Gift Hold-Over Relief available
Changes from April 2025
The FHL tax regime has been abolished from April 2025. From that date:[2]
- FHL income is treated as normal property income
- No more capital allowances — use Replacement of Domestic Items Relief instead
- No more Business Asset Disposal Relief on sale
- Mortgage interest restriction applies (20% tax credit, not full deduction)
- Profits no longer count as relevant earnings for pension contributions
Transitional rules apply. Capital allowances claimed before April 2025 continue to be written down. Check the latest GOV.UK guidance for details of the transition.
What This Means in Practice
Holiday landlords now face the same tax treatment as buy-to-let landlords — including MTD quarterly reporting from April 2026 once property income exceeds £50,000. The main impacts are:
- Higher effective tax rates for higher-rate taxpayers (due to mortgage interest restriction)
- No favourable CGT treatment on sale
- Less tax relief on furnishing and equipping the property
Frequently Asked Questions
Has the furnished holiday lettings tax regime been abolished?
Yes. The FHL tax regime was abolished from April 2025. FHL income is now treated as normal property income, meaning mortgage interest restriction applies, capital allowances are no longer available, and Business Asset Disposal Relief no longer applies on sale.
What were the qualifying conditions for a furnished holiday let?
A property had to be available for commercial holiday letting for at least 210 days, actually let for at least 105 days, and not occupied by the same person for more than 31 consecutive days for more than 155 days total in the tax year.
How are holiday lets taxed now?
From April 2025, holiday lets are taxed the same as buy-to-let properties. Mortgage interest is restricted to a 20% tax credit, there are no capital allowances on furniture, and Business Asset Disposal Relief does not apply when you sell.
Further Reading
- Property Income & MTD for Landlords
- Mortgage Interest Tax Relief for Landlords
- Repairs vs Improvements
- CGT When You Sell Property
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Sources
- Furnished holiday lettings — GOV.UK
- Work out your rental income — GOV.UK
- Capital allowances — GOV.UK
- Business Asset Disposal Relief — GOV.UK
- Self Assessment tax returns — GOV.UK