Holiday lets after the FHL regime.
The Furnished Holiday Lettings regime ended in April 2025. Mortgage interest deductibility, capital allowances, and CGT business asset disposal relief eligibility all changed. The articles below cover the transition.
Network service: Holiday let accounting
The FHL regime gave qualifying holiday lets four advantages: mortgage interest deducted as an expense (not restricted to a 20% credit), full capital allowances on furniture and equipment, profits counting as relevant earnings for pension contributions, and Business Asset Disposal Relief on disposal at 10% CGT.
From April 2025 all four are gone. Holiday lets are now treated as standard property businesses. Mortgage interest is restricted; capital allowances stop accruing with stranded balances written off via balancing adjustment; pension contribution headroom drops; and CGT on disposal is full residential rates.
The transition raises a stack of questions: what to do with the stranded capital allowance pool, whether to switch to long-let or stay with short-let under the new rules, whether business rates (where eligible) still apply, and whether to incorporate the holiday-let business before transition. The articles below work through each.
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