Reminder: Income from Furnished Holiday Lets now treated like other property income
20 April 2026 | posted in Personal tax Business tax
Furnished Holiday Let tax rules: What’s changed?
The special tax treatment for Furnished Holiday Lettings (FHL) was scrapped in April 2025. This means that income from Furnished Holiday Lettings is no longer treated separately for tax purposes. Instead, it is combined with any income from other UK or overseas property and will be subject to the same tax rules.
The changes remove the tax advantages for Furnished Holiday Lets, which are now taxed in the same way as long-term residential lets.
Changes to tax on Furnished Holiday Lets: What you need to do now
From the 2025 to 2026 tax year, all property income, including any income that was previously classified as income from Furnished Holiday Letting, must be declared according to the new rules on your Self Assessment tax return.
In practical terms, this means that the FHL and UK property sections on your tax return will be combined into a single section. Income and expenses from all UK properties will need to be reported together, with tax calculated on the net profit of the combined lets.
The key impact of these changes will be:
- Mortgage interest and other finance costs previously deductible in full against FHL rental income are now subject to the residential property finance cost restriction.
- FHL income no longer counts as “relevant UK earnings” for calculating maximum pension contribution relief from 6 April 2025
- Capital gains reliefs applying to FHL properties cease to be available but note Business Asset Disposal Relief may remain available where a FHL business actually ceased before April 2025
- Capital allowances on fixtures, furniture and furnishings are no longer available.
Importantly the FHL regime changes do not alter whether holiday accommodation supplies are standard-rated, exempt, or subject to VAT registration thresholds.
The first tax return reflecting these changes is due by 31 January 2027.
Contact the tax experts at Moore
If you need further advice on the changes to the tax treatment of Furnished Holiday Lets, please get in touch.
- Peterborough tax advice: 01733 397300
- Corby tax advice: 01536 461900
- Northampton tax advice: 01604 654254