UK-wide · Tax
Furnished Holiday Lettings abolition: what changed for UK holiday lets
- Status
- IN FORCEAbolition complete. FHL rules ceased to apply from 6 April 2025 (Income Tax and CGT) and 1 April 2025 (Corporation Tax).
- Last checked
- 28 July 2026
- Primary source
- gov.uk/hmrc-internal-manuals/property-income-manual/pim4165
- Written by
- The UK Holiday Let Software Directory editorial team
Status: IN FORCE — abolition complete Last checked: 28 July 2026 Primary source: HMRC Property Income Manual, PIM4165
What the legislation did
HMRC's Property Income Manual states: "The furnished holiday lettings rules cease to apply in tax years commencing on or after 6 April 2025 for Income Tax and for Capital Gains Tax, and 1 April 2025 for Corporation Tax and for Corporation Tax on chargeable gains."
GOV.UK's own holiday-home guidance for England puts it more plainly: "The government abolished the Furnished Holiday Let (FHL) tax regime on 6 April 2025." It adds that "From the 2025 to 2026 tax year onwards, all income from short-term holiday accommodation and self-catering properties is taxed under usual residential landlord rules."
HMRC's policy paper states the objective: "The measure promotes fairness and aligns the tax rules for furnished holiday lettings with those for other property businesses."
One point HMRC makes explicitly, because it is widely misread: "The repeal of FHL provisions does not mean that FHL businesses have ceased, it merely disapplies the relevant legislation." There is no deemed cessation.
Before and after
Facts only. The four changes below are the four the HMRC policy paper itself lists.
| Item | Under the FHL rules (to 5 April 2025) | After repeal (from 6 April 2025) |
|---|---|---|
| Mortgage and finance costs | Deductible in computing profits | HMRC: "Individual landlords can still obtain relief for finance and mortgage interest costs, but at the basic rate of Income Tax of 20%, in the same way as other landlords." |
| Capital allowances on new expenditure | Available on fixtures, furniture and furnishings | HMRC: "After repeal capital allowances are no longer available on fixtures, furniture or furnishings." |
| Existing capital allowances pools | Pooled expenditure relieved as normal | HMRC: "Where qualifying capital expenditure has been included in a capital allowance pool by 5 April 2025, Writing Down Allowances, balancing allowances and charges can continue to be claimed after April 2025 on that pooled expenditure until it is used up or a small pool claim is made." |
| Replacing furniture and domestic items | Capital allowances route | HMRC: "Replacement of Domestic Items Relief will then be available on replacement items." |
| Pension tax relief | FHL profits counted as relevant UK earnings | The measure removes the advantage by "no longer including this income within relevant UK earnings when calculating maximum pension relief" |
| Capital gains reliefs | Treated as trading business assets | The measure operates by "withdrawing access to reliefs from taxes on chargeable gains for trading business assets" |
| Losses | Ring-fenced FHL losses | HMRC: "Any losses incurred by the FHL in the current year or carried forward from previous years will be treated as losses of the ongoing UK or Overseas property business going forward." |
| Voluntary Class 2 / Class 3 NICs | — | HMRC: "The repeal of the FHL rules does not affect eligibility to pay voluntary Class 2 or Class 3 National Insurance Contributions." |
That last row is worth pausing on. Several secondary summaries state that abolition removed access to voluntary National Insurance contributions. HMRC's clarification note, under the heading "Voluntary Class 2 National Insurance contributions", states the opposite.
The capital gains reliefs, in HMRC's own terms
HMRC's Capital Gains Manual (CG73505) sets out the position relief by relief:
- Rollover relief — "Rollover relief under sections 152 onwards will not be available where the replacement asset is acquired on or after 6 April 2025 for the purposes of a holiday lettings business".
- Business Asset Disposal Relief — "BADR will not be available where there is a disposal of the whole or part of a FHL business on or after 6 April 2025".
- Relief for loans to traders — not available "where a loan has been made to a FHL business and the claim is made on or after 6 April 2025".
- Gift relief under section 165 is within the scope of the anti-forestalling provision below.
The anti-forestalling rule — confirmed date
This is the point most often stated without a source. HMRC's clarification note states it directly:
"Where a contract is made on or after 6 March 2024 and the disposal takes place on or after 6 April 2025 then Capital Gains Tax rollover, gift or Business Asset Disposal relief will not apply unless the claim includes a statement confirming that the conditions in paragraph 14(2) of the draft legislation are met."
The rule is at paragraph 14, Schedule 5, Finance Act 2025. HMRC's Capital Gains Manual describes its purpose as countering arrangements using an unconditional contract to fix a disposal date before abolition, and provides that the conditions turn on whether the contract was entered into for commercial reasons rather than to obtain the effect of the pre-abolition rules.
Date status: confirmed to primary source (GOV.UK, HMRC), 28 July 2026. Earlier drafts of this page carried a caveat; it is no longer needed.
Jointly let property
HMRC's guidance states that for jointly held property "The share for tax purposes must be the same as the share actually agreed." For spouses and civil partners, "profits and losses are treated as arising to them in equal shares" unless entitlement and ownership are in unequal shares and HMRC has been informed. HMRC's manual states a Form 17 declaration "must be submitted to HMRC within 60 days of your declaration of unequal shares". Under the FHL rules a different split was possible; PIM4190 states that "The abolition of the FHL provisions mean that holiday lettings are now treated the same as other property income."
What this measure does not address
The HMRC policy paper covers Income Tax, Capital Gains Tax and Corporation Tax. It does not deal with business rates or council tax; GOV.UK's holiday-home guidance handles those separately, stating only that "If your property is rated as a self-catering business, you may need to pay business rates instead of council tax." VAT is not addressed on that page at all. The Welsh letting-days test for local tax classification, and the Scottish and Welsh licensing and registration regimes, are separate bodies of law and are covered on their own pages here. FHL status was never the trigger for any of them.
Software that helps
From our directory categories: Accounting, tax & Making Tax Digital (tools that treat finance costs as a basic-rate tax reducer rather than a deduction, and that can produce a property-business view rather than a trade view); Property management systems (clean income and expense export by property); Compliance & licensing tools (retaining the evidence trail for pooled capital allowances brought forward).
This page summarises published government guidance and is not legal or tax advice. Last checked 28 July 2026.