Holiday let tax after the FHL abolition
In short
From HMRC and GOV.UK guidance. Not tax advice.
- The FHL tax rules have ended across the UK. From 6 April 2025 for Income Tax and Capital Gains Tax, and 1 April 2025 for Corporation Tax. Council tax and business rates did not change.
- Taxed like other property income. A former holiday let is now part of your UK (or overseas) property business. The 105-night and 210-day tests no longer matter for Income Tax or Capital Gains Tax.
- Mortgage interest: if you let as an individual, relief is now at the basic rate of Income Tax (20%) only, like other landlords. Companies are not affected by this restriction.
- No new capital allowances. You can keep writing down an existing pool. Replacing furniture and kit now uses replacement of domestic items relief. Old FHL losses carry forward against property profits.
- Selling and pensions: Business Asset Disposal, rollover and gift relief no longer apply to disposals from 6 April 2025, apart from limited transitional cases. An anti-forestalling rule applies from 6 March 2024. Profits no longer count as earnings for pension relief.
- Do now: go through what to check for your own lets, and get an email when holiday-let tax rules change. Next up: Making Tax Digital for Income Tax from 6 April 2027 if your property and self-employment income was over £30,000 in 2025 to 2026.
How holiday lets are taxed since the furnished holiday let (FHL) rules ended, in plain English with HMRC sources, including static caravans.
Before and after
| Area | Under the FHL rules | Now |
|---|---|---|
| Mortgage and loan interest (individuals) | Deducted in full from profits | Restricted: relief only at the basic rate of Income Tax, as for other residential landlords |
| Furniture, equipment and fittings | Capital allowances on new spending | Replacement of domestic items relief for replacing items. An existing capital allowances pool can still be written down |
| Losses | Kept in a separate FHL pot | Carried forward and set against your UK (or overseas) property business profits |
| Capital Gains Tax reliefs on sale | Business Asset Disposal Relief, rollover relief, gift relief could apply | No longer available for disposals from 6 Apr 2025, apart from limited transitional cases |
| Pension contributions | Profits counted as relevant UK earnings | No longer counted as relevant UK earnings |
| Tax return | Separate FHL pages | Reported as part of your ordinary property business |
What to check for your own lets
- Mortgage interest: if you own the let personally and pay higher-rate tax, your tax bill on the same profit may go up because interest relief is now limited to the basic rate.
- Capital allowances pool: keep claiming writing-down allowances on any existing pool. Treat new furniture and kit under the property rules.
- Losses: any FHL losses brought forward can now be used against profits from your other UK lets.
- Selling soon: FHL capital gains reliefs no longer apply to disposals from 6 April 2025, apart from narrow transitional cases. Take advice before selling.
- Pensions: holiday let profits no longer count as earnings for pension tax relief.
- Small income: if your gross property income is £1,000 or less a tax year, the property allowance means you may not need to tell HMRC.
Static caravans and FHL abolition
Does the FHL abolition affect static caravans?
Yes. If a static or holiday caravan you let out qualified as a furnished holiday let (FHL), it lost that treatment in April 2025 like any other holiday let, and its income is now part of your property business. HMRC says the changes are the same whether or not there are usage restrictions on the let, so a holiday-only planning condition makes no difference. Mortgage interest relief is limited to the basic rate for individuals, and FHL capital gains reliefs have gone for disposals from 6 April 2025.
- Capital allowances on the caravan: the Capital Allowances Act 2001 still lists caravans provided mainly for holiday lettings as plant (List C, item 19), and HMRC’s CA22100 (updated 8 Jul 2025) accepts such a caravan on a licensed holiday caravan site as plant whether it is moved or not. Caravans on residential sites do not qualify. But a property business cannot claim allowances on plant for use in a dwelling-house (section 35), and HMRC has not said how this applies to a let holiday caravan after April 2025. We have not found an official answer, so check with an accountant before claiming.
- Existing pool: if you already have a capital allowances pool, you can keep claiming writing-down allowances on it.
- Caravan parks: HMRC says a caravan site may be a trade, a mix of trade and letting, or purely letting, depending on the services provided. A site operator carrying on a trade can choose to put caravan and pitch letting income into the trade profits (ITTOIA 2005, s20). HMRC says FHL income was always property income, not trading income.
- Council tax: in England, an occupied caravan pitch that is nobody’s main home is excepted from the second homes premium (Class K). This is separate from income tax.
Local taxes are separate and did not change with the FHL abolition. See Scotland business rates or council tax, Wales rules and the UK visitor levy map.
Get an email when holiday-let tax rules change
Holiday let tax is still changing. From 6 April 2027, Making Tax Digital for Income Tax applies if your self-employment and property income was over £30,000 in 2025 to 2026, and property income gets its own tax rates (24%, 44%, 49% after Budget 2026) in England, Wales and Northern Ireland. We check HMRC and GOV.UK and email you when something changes.
Next holiday-let tax dates we're watching:
- 7 Nov 2026, UK: Making Tax Digital for Income Tax: second quarterly update due (6 Apr to 5 Oct) for landlords already using it; no penalty points for late updates in 2026 to 2027 (source)
- 31 Jan 2027, UK: Online Self Assessment tax return for 2025 to 2026 due by 11:59pm, and any tax owed must be paid (source)
- 6 Apr 2027, UK: Making Tax Digital for Income Tax applies if your self-employment and property income was over £30,000 in 2025 to 2026 (source)
Pick the nation your let is in: you get UK tax changes plus rule changes for that nation. Plus one short weekly UK "what changed" email. Free, no spam, unsubscribe any time.
Rules in your council
Each council page has the local licensing, planning, visitor levy and fee rules, key dates and official sources, plus a free email alert when they change.
England: 35 council pages
- Bath and North East Somerset
- Bournemouth, Christchurch and Poole
- Brighton & Hove
- Canterbury
- Chichester
- Cornwall
- Cotswold
- Cumberland
- Derbyshire Dales
- Dorset
- East Devon
- East Lindsey
- East Suffolk
- Folkestone and Hythe
- Greater London (all boroughs)
- Isle of Wight
- Isles of Scilly
- King's Lynn and West Norfolk
- Liverpool
- New Forest
- North Devon
- North Norfolk
- North Yorkshire
- Northumberland
- Rother
- Sefton
- Somerset
- South Hams
- Teignbridge
- Thanet
- Torbay
- Torridge
- West Devon
- Westmorland and Furness
- City of York
Scotland: 31 council pages
- Aberdeen City
- Aberdeenshire
- Angus
- Argyll and Bute
- Clackmannanshire
- Dumfries and Galloway
- Dundee City
- East Ayrshire
- East Dunbartonshire
- East Lothian
- East Renfrewshire
- City of Edinburgh
- Falkirk
- Fife
- Glasgow City
- Highland
- Inverclyde
- Midlothian
- Moray
- Na h-Eileanan Siar (Western Isles)
- North Ayrshire
- North Lanarkshire
- Orkney Islands
- Renfrewshire
- Scottish Borders
- Shetland Islands
- South Ayrshire
- South Lanarkshire
- Stirling
- West Dunbartonshire
- West Lothian
Common questions
When was the furnished holiday let tax regime abolished?
From 6 April 2025 for Income Tax and Capital Gains Tax, and from 1 April 2025 for Corporation Tax. It applies across the whole UK.
How is holiday let income taxed now?
Income and gains from a former furnished holiday let form part of your UK (or overseas) property business and are taxed in the same way as other property income and gains.
Can I still deduct my mortgage interest?
If you let as an individual, finance costs such as mortgage interest are now restricted: you get relief at the basic rate of Income Tax only, the same as other residential landlords. HMRC says UK and non-UK resident companies are not affected by this restriction.
What happens to capital allowances I already claimed?
If you have an existing capital allowances pool, you can keep claiming writing-down allowances on it. New spending on or after the change is dealt with under the normal property rules, which includes replacement of domestic items relief.
What happens to my old FHL losses?
Losses carried forward from your FHL business can be set against future profits of your UK (or overseas) property business.
Can I still get Business Asset Disposal Relief when I sell?
Not for disposals of a holiday let business on or after 6 April 2025. It may still be available in limited cases, for example where an FHL business actually stopped before 6 April 2025 and assets are sold within the normal 3-year period.
Is there a tax-free allowance for small amounts of rental income?
Yes. Individuals can use a property allowance of up to £1,000 a tax year. If your gross property income is £1,000 or less you do not need to tell HMRC. Above that you can deduct the £1,000 allowance instead of your actual expenses.
Do the 105-night and 210-day tests still matter?
Not for Income Tax or Capital Gains Tax. Those tests decided whether a property counted as a furnished holiday let, which no longer exists. Separate night-count rules still apply to business rates in Scotland and Wales.
Does the FHL abolition apply to static caravans?
Yes. If a static or holiday caravan you let out qualified as a furnished holiday let, it lost that treatment at the same time as other holiday lets: from 6 April 2025 for Income Tax and Capital Gains Tax, and 1 April 2025 for Corporation Tax. Its income now forms part of your property business. HMRC says the changes are the same whether or not there are usage restrictions on a let property, and they do not change Council Tax or business rates.
Can I still claim capital allowances on a holiday caravan after April 2025?
It is not clear from HMRC guidance. The Capital Allowances Act still lists caravans provided mainly for holiday lettings as plant, and HMRC accepts that a caravan provided mainly for holiday lettings on a licensed holiday caravan site is plant, but a property business cannot claim allowances on plant for use in a dwelling-house. HMRC has not said how these rules apply to a let holiday caravan after the FHL abolition, so check with an accountant before claiming. Existing capital allowances pools can still be written down.
Is a caravan park taxed as a trade or as property income?
It depends on what the site does. HMRC says a caravan site may be a trade, a mix of trade and letting, or purely letting, depending on the services provided. If the site operator carries on a trade, the operator can choose to include caravan and pitch letting income in the trade profits. HMRC also says income from a former furnished holiday let has always been property income, not trading income.
Official sources
Show all official sources (11)
- HMRC policy paper: Abolition of the furnished holiday lettings tax regime (updated 7 Nov 2024)
- HMRC Capital Gains Manual CG73505: FHL, consequences of abolition
- Finance Act 2025, Schedule 5
- GOV.UK: Work out your rental income when you let property (updated 19 Mar 2025)
- GOV.UK: Tax-free allowances on property and trading income
- HMRC: Clarification on abolition of the furnished holiday lettings tax regime (updated 7 Nov 2024)
- HMRC Capital Allowances Manual CA22100: caravans (updated 8 Jul 2025)
- Capital Allowances Act 2001, section 23, List C (item 19: caravans provided mainly for holiday lettings)
- Capital Allowances Act 2001, section 35 (plant or machinery for use in a dwelling-house)
- HMRC Property Income Manual PIM1112: caravan sites
- Income Tax (Trading and Other Income) Act 2005, section 20: caravan sites where trade carried on
Not tax advice. Checked 2026-10-30. Tax depends on your circumstances, so speak to an accountant or HMRC before acting.
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