Furnished Holiday Lettings Tax Change Compliance Check

Why this matters

From 6 April 2025 (1 April 2025 for companies), the Furnished Holiday Lettings (FHL) tax regime was abolished, and every FHL property is now taxed under the standard UK or overseas property business rules. This removed four significant tax advantages in one go: full mortgage interest deduction against rental profits (now restricted to a basic-rate tax credit, like other landlords); capital allowances on new furniture, equipment, and fixtures (limited to replacement domestic items relief only); access to Business Asset Disposal Relief, gift relief, rollover relief, and the substantial shareholdings exemption on disposal; and the ability to count FHL profits as relevant earnings for pension contribution purposes. The 2025/26 tax year — which ended 5 April 2026 — was the first full year under the new rules, and it’s the return landlords will file between now and 31 January 2027 that will show the real financial impact for the first time.

Some transitional protections still apply and are easy to miss: historical capital allowances pools from expenditure before the change date continue to run down as normal, FHL losses can now be set against other UK property business profits rather than being ring-fenced, and a time-limited disposal relief window preserves CGT treatment for properties sold within three years of ceasing to qualify as an FHL. Joint owners — including many married couples and civil partners — also need to actively elect for an unequal profit split, because without one, FHL income defaults to the standard 50:50 property income rule rather than reflecting actual ownership or work input. Landlords who haven’t reviewed their finance costs, capital allowances position, ownership structure, or upcoming disposal plans against these changes risk an unwelcome surprise on their 2025/26 self assessment bill.

What you'll need

• Whether you own one or more furnished holiday let properties in the UK or overseas
• Whether the property has a mortgage or other loan finance secured against it
• Whether you claimed capital allowances on furniture, equipment, or fixtures under the old FHL rules
• Whether you jointly own the property with a spouse, civil partner, or other person
• Whether you are planning to sell an FHL property in the near future

What you'll get

A personalised compliance report covering: a score out of 100, an executive summary, a list of findings ranked by severity, and a prioritised action plan with timeframes.