by Asim Abbas
12 November 2026 
Furnished holiday lettings abolished: what it means for holiday let owners
Furnished holiday lettings abolished: what it means for holiday let owners
The special tax rules for furnished holiday lettings (FHL) ended in April 2025.
- FHL rules ended from 6 April 2025 for Income Tax (1 April 2025 for Corporation Tax).
- Mortgage interest now gets only a 20% tax credit for individuals.
- No new capital allowances on furniture and equipment; replacement relief applies instead.
- Holiday let profits no longer count as earnings for pensions.
Holiday lets are now taxed much like any other rental property. Here is what changed and what to do about it.
What changed when FHL was abolished
- Finance costs: individuals can no longer deduct mortgage interest in full. Like other landlords, they get a 20% tax credit.
- Capital allowances: new spending on furniture and equipment no longer qualifies for capital allowances. Existing pools can continue to be written down, and replacement of domestic items relief applies to replacements.
- Pensions: holiday let profits are no longer relevant earnings for pension contributions.
- Capital Gains Tax: Business Asset Disposal Relief, rollover relief and gift relief for business assets are no longer available on holiday lets, subject to transitional rules.
- Profit splits: jointly owned holiday lets follow the normal property rules, so spouses are usually taxed 50:50 unless they own unequal shares and make a declaration.
Estimate tax on your rental income
Our rental income calculator gives a quick estimate.
What holiday let owners should do now
Check your 2025/26 return treats the property as an ordinary rental business. Review whether owning through a company would now suit you better (see incorporating a property portfolio). Remember that rental income counts towards Making Tax Digital thresholds.
Rates are rising from April 2027
Property income will be taxed at separate, higher Income Tax rates from April 2027, and the Budget on 28 October 2026 announced a further increase. Planning before then could save tax. Talk to our property accountants.
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Get a fixed-fee quoteCall 0161 531 4179What should I do next?
Make sure FHL treatment has been removed.
It is now a 20% credit.
Personal or company ownership.
Frequently Asked Questions
When were furnished holiday lettings abolished?
From 6 April 2025 for Income Tax and 1 April 2025 for Corporation Tax.
Can I still claim mortgage interest on a holiday let?
Individuals get a 20% tax credit on finance costs, the same as other residential landlords.
Can I still claim capital allowances on furniture?
Not on new spending. Existing pools continue, and replacement of domestic items relief applies to replacements.
Can I get Business Asset Disposal Relief when I sell?
Not usually now that FHL is abolished, apart from limited transitional cases.
Need help with this? Wingate Accountants offers fixed-fee online accountancy support across the UK. Call 0161 531 4179 or request a quote at wingateaccountants.co.uk.
About the Author
Asim Abbas
I’m Asim Abbas, founder of Wingate Accountants and a Chartered Certified Accountant. I help sole traders, landlords and directors stay on top of their tax with fixed fees and plain-English advice.
