After FHL: capital allowances, mortgage interest, and the change of use.

The Furnished Holiday Lettings regime ended in April 2025. Mortgage interest deductibility, capital allowances, and CGT business asset disposal relief eligibility all changed. Our network firms have rerun the numbers for every Thames Valley short-let client they look after and can do the same for yours. Free intro, in 60 seconds.

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Holiday lets, by the numbers.

Apr 2025

When the FHL regime was abolished

Holiday let / short-let landlords transitioned to date

4 weeks

Average time to model and execute the transition

No. 01 / What’s changed

FHL is gone, and the differences land everywhere.

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 (10% CGT up to the £1m lifetime limit).

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 (24% higher rate).

The transition raises a stack of questions: stranded capital allowances, change of use to a long let, business rates versus council tax classification, and whether to incorporate the holiday-let business before transition. Our matched network firms model each path before anything moves.

No. 02 / What's included

What your matched firm covers, line by line.

Most common

FHL transition modelling

Side-by-side projection of three paths: continue short-let under standard rules, switch to long-let, or incorporate. Tax impact over five years for each.

Stranded capital allowances

Balancing adjustment on the FHL pool when the regime ends. Where eligible, claimed as an additional deduction in the transition year.

Mortgage interest restriction

Recalculation of the post-FHL position with Section 24 mortgage finance cost restriction. Often the single biggest line on the new tax bill.

Business rates versus council tax

Holiday lets meeting the let-day threshold (140+ days available, 70+ let in England) qualify for business rates and small business rate relief. We file the assessment dispute where the council has misclassified.

Change of use to long let

Where the change makes financial sense: tenancy paperwork, deposit protection, MTD signup, and the council tax reclassification.

Holiday-let incorporation

For continuing operators, the incorporation question is often clearer post-FHL. We model under the same framework as standard BTL incorporation.

No. 03 / What it costs

Per-property monthly pricing.

Holiday lets price slightly higher than single lets because of the additional bookkeeping, business rates admin, and platform reconciliation work.

Single holiday let

£75/mo

One short-let property.

Quarterly submissions
Platform reconciliation (Airbnb, Vrbo, etc)
Business rates admin
Annual finalisation

What landlords ask before we make the intro.

No. Short-letting is still allowed. The change is in tax treatment: short-lets are now taxed as standard property businesses rather than under the FHL regime. Whether to switch to long-let is a commercial decision based on yields, demand and operational preference, not a tax requirement.

Mid-transition, mid-disposal, or just unsure?

Tell us where you are in 60 seconds. We’ll match you with a holiday-let specialist in our network; they come back within one working hour with the right next step, no pitch.