Furnished Holiday Let Tax After Abolition: 2026/27

The Furnished Holiday Lettings (FHL) tax regime has been abolished. From 6 April 2025 for Income Tax and Capital Gains Tax—and 1 April 2025 for Corporation Tax—qualifying holiday lets no longer receive the former special FHL treatment. In 2026/27, income from short-term and self-catering accommodation is generally taxed under the ordinary property-income rules.

This is a major change from older guidance that referred to availability and occupancy tests or automatic access to trading-style tax reliefs.

FHL tax treatment before and after abolition

What happened to the 210-day and 105-day tests?

The old regime required conditions including availability to the public for at least 210 days and actual commercial letting for at least 105 days, with limits on longer-term occupation. Those tests determined whether a property qualified for the former tax advantages. They do not restore FHL tax status for 2026/27 because the regime itself has ended.

Occupancy information can still matter for business rates, planning, local registration, insurance and commercial analysis, so operators should continue keeping booking records.

Reporting holiday-let income in 2026/27

Individuals normally include receipts and expenses in the UK or foreign property section of Self Assessment. From the 2025/26 return onwards, former FHL income is no longer reported as a separate privileged category. UK and overseas property businesses remain separate from one another.

Gross receipts include booking income and charges for services. Deductible expenses must satisfy the ordinary property-business rules. Keep platform statements, invoices, bank records, occupancy calendars and private-use adjustments. See our guide to reporting rental income.

Mortgage interest and finance costs

For individual landlords of residential holiday accommodation, the residential property finance-cost restriction now generally applies in the same way as for other residential landlords. Interest is not normally deducted in full when calculating taxable rental profit; relief is usually given as a basic-rate tax reduction, subject to statutory limits. Capital repayments receive no income-tax relief. Companies follow the corporation-tax loan-relationship rules instead.

Our mortgage-interest guide explains the calculation and cash-flow effect.

Capital allowances and domestic items

The special FHL qualifying activity for plant and machinery allowances has ended for new expenditure. Existing pools may require transitional treatment, including possible writing-down allowances, balancing charges or allowances depending on the facts.

For residential accommodation, replacement of domestic items relief may instead cover qualifying replacements such as furniture, appliances, carpets and curtains. It generally does not cover the first purchase, and an upgrade element can be restricted. Read our replacement domestic items guide.

Losses after the change

Former FHL losses and ordinary property-business losses were historically kept in separate pools. The repeal contains transitional rules, and post-repeal profits and losses are generally dealt with under normal property rules. Do not simply merge historic figures without checking the brought-forward position and whether the property is UK or overseas.

Capital Gains Tax on a holiday-let sale

A disposal on or after 6 April 2025 by an individual no longer qualifies for former FHL trading-asset treatment merely because the property was a holiday let. This affects access to reliefs such as Business Asset Disposal Relief, gift relief and roll-over relief. Transitional provisions can preserve some outcomes where conditions were met before abolition, and anti-forestalling rules restrict arrangements involving unconditional contracts.

Keep acquisition costs, improvement invoices, legal fees and historic capital-allowance records. Obtain advice before exchange of contracts because the timing and earlier claims can affect the calculation.

Jointly owned holiday lets

The old FHL rules allowed particular profit allocations between spouses and civil partners. After repeal, the ordinary rules for jointly held property apply. Married couples and civil partners living together are generally taxed 50:50 unless the beneficial ownership and any valid HMRC declaration support a different split. Other joint owners are normally taxed according to their beneficial entitlement.

Non-tax obligations in 2026/27

Abolition changed tax treatment, not operating responsibilities. Check:

• planning permission, local registration or licensing;
• business-rates or council-tax classification;
• fire, gas, electrical and carbon-monoxide safety;
• holiday-let and public-liability insurance;
• food, alcohol, television or music licensing where relevant;
• consumer terms, data protection and platform reporting.

Rules vary across England, Scotland, Wales and Northern Ireland and can also differ by local authority.

2026/27 action checklist

1. Remove obsolete FHL qualification assumptions from forecasts and tax software.
2. Combine current income with the correct UK or overseas property business.
3. Apply the residential finance-cost rules where relevant.
4. Review capital-allowance pools and replacement-item claims.
5. Reconcile historic FHL losses and current property losses.
6. Model CGT before selling or gifting the property.
7. Check local operating, safety and registration requirements.

Official sources

• HMRC: abolition of the FHL tax regime
• GOV.UK: self-catering holiday-home rules
• HMRC: capital allowances after repeal
• HMRC: CGT consequences of abolition

This guide reflects the position for 2026/27 and is general information, not personal tax or legal advice.