Holiday Let Income Tax Calculator (Post-April 2025)
FHL Tax Changes: What Was Lost in April 2025
- No CGT Business Asset Disposal Relief — gains on sale now taxed at 18%/24%, not 10%.
- No rollover or gift relief on FHL property sales.
- No capital allowances on furniture and equipment (only Replacement of Domestic Items Relief).
- No pension contributions from FHL profits (FHL profits were “relevant UK earnings”).
- Section 24 applies — mortgage interest now restricted to basic-rate credit only.
Frequently Asked Questions
What happened to FHL tax rules April 2025?
The furnished holiday let (FHL) regime was abolished with effect from 6 April 2025. From that date, FHL properties are taxed in the same way as standard UK residential property lettings. FHL landlords lost: the ability to treat FHL profits as earnings for pension purposes, access to capital allowances, Business Asset Disposal Relief, rollover relief, gift relief, and the ability to offset FHL losses against other income. Section 24 mortgage interest restriction now applies.
How is holiday let income taxed now 2026?
From April 2025, holiday let income is taxed as standard property income. Landlords deduct allowable expenses from gross rental income to calculate taxable profit. Mortgage interest is restricted to a basic-rate tax credit (20%) under Section 24. Tax is then due at 20% (basic rate) or 40% (higher rate) on the taxable profit, with the 20% mortgage interest credit deducted from the tax bill.
Can I still claim capital allowances on holiday lets?
No. Capital allowances on furniture, fixtures, and equipment in holiday let properties were abolished alongside the FHL regime from April 2025. Now, holiday let landlords must use the Replacement of Domestic Items Relief — a deduction only when replacing existing items, not for initial purchases.
Does Section 24 apply to holiday lets now?
Yes. Section 24 mortgage interest restriction now applies to all residential property lettings including former FHL properties from 6 April 2025. Landlords can no longer deduct mortgage interest directly from rental income. Instead, a tax credit equal to 20% of mortgage interest is applied against the tax liability. Higher-rate taxpayers are most affected by this change.
What were the qualifying conditions for FHL?
Prior to abolition in April 2025, a furnished holiday let had to be: available for commercial letting for at least 210 days per year; commercially let for at least 105 days per year; and not let for more than 31 consecutive days to the same person for more than 155 days. These conditions no longer apply as the FHL regime has been abolished. All short-term lets are now treated as standard property income.