Furnished Holiday Let Tax — Post April 2025 Rules Calculator

The FHL tax regime was abolished from 6 April 2025 (for income tax) and 1 April 2025 (for corporation tax). From these dates, FHL properties are taxed as ordinary residential rental income — losing all the special FHL tax advantages.

FHL owners lost: (1) Capital allowances on furniture and equipment, (2) Business Asset Disposal Relief (10% CGT on sale), (3) Ability to treat FHL profits as earnings for pension contribution purposes, (4) Gift relief on transfers, (5) Full mortgage interest deduction (now restricted to 20% tax credit like other residential landlords).

No longer in full. Like all residential landlords since 2017-20, mortgage interest is no longer deductible from rental income. Instead, you get a 20% tax credit on mortgage interest paid. This is significantly less beneficial for higher and additional rate taxpayers.

Former FHL properties can claim the Replacement of Domestic Items Relief — a deduction for replacing (not first-purchase) furniture, furnishings, appliances and kitchenware on a like-for-like basis. This is less generous than capital allowances as it only covers replacements, not initial purchases.

HMRC provided transitional guidance: capital allowances already claimed before April 2025 are not clawed back, and capital allowance pools could continue being written down (though no new claims). Properties that were FHL before April 2025 simply move into the ordinary rental property regime for 2025/26 onwards.

Selling depends on your circumstances. CGT rates for residential property are 18% (basic rate) and 24% (higher rate) from October 2024 onwards. The old BADR rate of 10% is no longer available. Consider holdover relief if transferring to family, or letting as a long-term rental to spread costs.

Transferring to a company triggers SDLT on market value and potentially CGT. Inside a company, rental profits are taxed at corporation tax rates (19-25%). However, the Section 162 incorporation relief for FHL was withdrawn — transfer may trigger full CGT without relief. Get specialist advice before any incorporation.

The FHL occupation tests (available for 210 days, let for 105 days, no single occupancy over 31 days) no longer matter from April 2025 as the FHL regime is abolished. For 2024/25 and earlier, these tests determined whether properties qualified as FHL.

Yes. The distinction between UK FHL and EEA FHL is also abolished from April 2025. All holiday rental properties — wherever located — are now treated under standard rental property tax rules.

Rent-a-Room relief (£7,500 tax-free) only applies to letting rooms in your main residence. It cannot be used for investment holiday let properties unless you genuinely live there as your main home and rent out rooms.

This depends on your yield and mortgage situation. High-yield properties in tourist areas may still be profitable even with higher tax. However, higher-rate taxpayers with mortgages face a significant tax increase. The viability depends on location, occupancy rates, operating costs, and comparison with long-term let returns.

Losses carried forward under the FHL regime cannot be offset against post-April 2025 ordinary rental income. They could only be offset against future FHL profits — but since FHL no longer exists, these losses may be permanently lost. HMRC confirmed unused FHL losses will not be available post-abolition.