The regime is gone
The furnished holiday lettings regime was abolished from 6 April 2025 for income tax and capital gains tax, and from 1 April 2025 for companies.
Properties that qualified as FHLs are now treated as an ordinary UK or overseas property business, the same as any buy to let.
What you have actually lost
Four things, and each of them mattered.
Full mortgage interest relief. FHLs could deduct finance costs in full against profit. Ordinary property businesses cannot, and only get a 20% tax reducer. For a geared holiday let, this is the big one, and for a higher rate taxpayer it can turn a paper profit into a loss after tax.
Capital allowances on furniture and equipment. Gone. You are now on replacement of domestic items relief, which only covers replacing things, not kitting a property out in the first place.
Capital gains reliefs. Business Asset Disposal Relief, rollover relief and gift holdover relief are no longer available on these properties. A holiday let that could have been sold at the BADR rate is now taxed at 18% or 24%.
Pensionable earnings. FHL profits counted as relevant earnings for pension contribution purposes. They no longer do, which quietly reduces how much some owners can contribute.
What to do now
Run the numbers again properly, because the after tax return on a mortgaged holiday let is materially different from what it was. Some properties that made sense under the old rules do not under the new ones. That is an uncomfortable conclusion but it is better reached deliberately.
Check whether incorporating helps. Companies still get full interest relief, but incorporating triggers stamp duty and a capital gains disposal, so it is rarely a free move and it needs modelling rather than assuming.
If you are selling, understand the capital gains position before you commit to a date, not after.
Keep the records of the transitional position. There were rules on losses and on capital allowances pools carried over, and getting those right in the first year post abolition matters.
Common questions
Can I still let it out as a holiday let?
Of course. Nothing stops you running the business. Only the tax treatment changed. It is now taxed as a property business rather than something closer to a trade.
What happened to my losses?
There were specific transitional rules for FHL losses being carried into the ordinary property business. Worth checking rather than assuming they vanished.
This reflects the position since abolition on 6 April 2025. If you own a former holiday let and have not revisited the numbers since, get in touch.
Related services and guides
Landlord tax service Landlord expenses guide Accountants for landlords