General information, not tax advice. Your position depends on your circumstances, so check with HMRC or an accountant before you file. Checked September 2026.
The furnished holiday lettings tax regime ended in April 2025, so holiday let income is now taxed under the same rules as other property income. Guides written before then may describe reliefs that no longer apply, such as the old treatment of mortgage interest and furniture. This guide sets out what changed, what it means for your figures, the records you still need to keep, and the checks to make before your next tax return.
What changed for holiday lets from April 2025
Until April 2025, a holiday let that passed the furnished holiday lettings tests was taxed more like a business than an ordinary rental. That regime has now ended. From 6 April 2025 for income tax and capital gains tax, and 1 April 2025 for companies, a former holiday let is simply part of your UK property business, taxed on the same rules as any other residential let.
Old holiday let rules and the rules now
Based on HMRC's policy paper. Checked September 2026.
| Area | Before April 2025 (qualifying holiday lets) | From April 2025 |
|---|---|---|
| Mortgage interest | Deducted in full from rental income | Relief only as a 20% basic-rate tax credit, the same as other residential lets |
| Furniture and equipment | Capital allowances on new purchases | Replacement of domestic items relief for like-for-like replacements; existing capital allowance pools can still be written down |
| Pension contributions | Profits counted as relevant earnings | Profits no longer count |
| Selling the property | Business reliefs such as Business Asset Disposal Relief could apply | Taxed as ordinary residential property, with transitional rules in some cases |
| Losses | Usable only against future holiday let profits | Can be set against your wider property business profits |
The biggest change for most hosts is mortgage interest. If you're a higher-rate taxpayer with a mortgage on the property, relief at 20% instead of your full rate can noticeably increase your tax bill, even though nothing about the letting itself has changed.
Anything written before April 2025 that describes holiday lets as having their own tax rules is describing the old regime. Treat it as history, not guidance.
What the mortgage interest change means in pounds
Take a simplified example. A higher-rate taxpayer pays £6,000 a year in mortgage interest on their holiday let.
Under the old rules, the £6,000 was deducted from rental income, saving tax at 40%: £2,400.
Now the interest isn't deducted. Instead you get a tax credit of 20% of it: £1,200. On the same rental income, that's £1,200 more tax a year, with nothing about the letting having changed.
Your figures will differ, and the credit has limits in some situations, but this is why the change hit mortgaged holiday lets hardest.
Replacing furniture: what you claim and what you don't
Capital allowances used to cover furniture and equipment you bought for a holiday let. Now, replacement of domestic items relief applies instead. It covers the cost of replacing furniture, furnishings, appliances and kitchenware that were already in the property, on a like-for-like basis.
Two things catch hosts out. It doesn't cover the first furnishing of a property, so kitting out a new holiday let doesn't give you relief against rental income. And if you upgrade, you can only claim what a like-for-like replacement would have cost. A £900 sofa replacing an old £500 one gets relief on £500.
Any capital allowances pool from before April 2025 can still be written down, so don't lose track of it.
What to check before your next return
Work through these before you file, or before your accountant does:
Five checks for a former holiday let
- Mortgage interest: is it claimed as a 20% tax credit, not deducted as an expense?
- Furniture and equipment: are new purchases claimed as replacement of domestic items, with any old capital allowance pool still being written down?
- Losses: have any old holiday let losses been carried into your wider property business?
- Pensions: have you planned contributions without counting holiday let profits as earnings?
- Selling: if you plan to sell, have you checked whether any transitional relief applies before you agree a sale?
Put a reminder in your calendar a month before each filing deadline to repeat this check. Tax rules for property have changed before and will change again.
Records to keep, whatever the rules
Here's the part that stays the same: the discipline of good record-keeping doesn't change when the tax treatment does. What changes is how the records are used on a return.
Keep tracking, with evidence: each booking's gross income, platform fees and net payout; each expense with its date, amount, category and receipt; capital spending separately from day-to-day running costs, because a new kitchen is treated differently from a plumber's routine call-out; and the nights the property was let, available to let, and used by you. Personal use affects which costs you can claim, and letting nights decide whether you pay business rates or council tax, as covered in how business rates and council tax apply in each UK nation. To check part-way through the year that a let is on course for its nation's letting test, use the holiday let business rates tracker.
If you already keep a booking ledger and an expense ledger, that system carries over completely. A bookkeeping system for holiday lets sets one up if you don't, including what Making Tax Digital now requires.
Old thresholds that no longer apply
The most likely mistake in the wake of a change like this isn't ignorance that anything changed; most hosts running a holiday let will have heard, at least vaguely, that furnished holiday lettings tax rules changed. The likelier mistake is assuming that everything else about how they calculate their figures carries over unchanged, when in fact several connected things, like how interest is treated or how allowances work, may have shifted as a consequence of the wider change, not just the specific test that used to define a qualifying holiday let.
This is why a partial understanding of "the FHL rules changed" is riskier than no understanding at all. It creates false confidence. Someone who knows nothing is more likely to ask. Someone who half-remembers a headline is more likely to guess, and guess wrong, on the details that affect their return.
When to bring in an accountant versus doing this yourself
If your situation is straightforward (one property, no other complicating income, and no purchase or sale around April 2025), it's entirely possible to work through HMRC's current guidance yourself and file confidently, provided you do the verification work above rather than relying on memory or old articles.
If your situation involves any of the following, professional advice is worth the cost: you bought or sold the property around the April 2025 transition, you have a mortgage and previously relied on the favourable interest treatment the old regime offered, you've previously claimed capital allowances on furniture or equipment under the old rules, or you have other income sources that interact with your property income in ways that make the overall picture complicated. None of these situations are unusual for a self-managing host, and none of them are situations where a wrong guess is cheap to unwind later.
Keeping up with rule changes
Tax rules for property income, including holiday lets, have changed before this and will change again. The furnished holiday lettings regime itself existed for years before being withdrawn, and whatever rules apply now are not guaranteed to be permanent either.
The lasting lesson from this specific change isn't a number to remember. It's a habit to keep: treat the current rules as current, meaning true right now and worth reconfirming before your next return, rather than as settled knowledge you learned once. Keep your records clean and complete regardless of which regime is in force, because good records are useful under any set of rules and become expensive to reconstruct under none. And build the small, recurring habit of checking HMRC's current guidance, or asking your accountant a specific question, before you rely on last year's understanding for this year's return.