Furnished Holiday Lettings (FHL): Major Tax Changes
Effective 6th April 2025, the special tax treatment and separate reporting requirements for Furnished Holiday Lettings (FHLs) have been removed. This change affects all individuals who operate or sell FHL properties.
Key Changes
The removal of FHL status means landlords will no longer receive preferential tax treatment in areas such as:
- Finance cost restrictions – Mortgage interest and other finance costs will now only receive relief at the basic rate of Income Tax.
- Capital allowances – Landlords can no longer claim capital allowances on new expenditure. Instead, they will need to rely on Replacement of Domestic Items Relief when replacing furniture, appliances, or kitchenware.
Impact on Landlords
From April 2025, properties that previously qualified as FHLs will simply be treated as part of a landlord’s UK or overseas property business, following the same rules as non-FHL properties.
This represents a significant shift for landlords who previously benefited from generous tax reliefs, and it may be necessary to review investment plans, financing structures, and tax strategies going forward.
Please feel free to get in contact with our team at PJCO if you have any questions — we’re here to help. You can book a free discovery call by clicking the link below!
Please get in touch on 01273 441187 or book a discovery call with one of our expert accountants.
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