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.
ReadingSloughWindsorMaidenheadMarlowHigh WycombeBracknellWokinghamHenley on ThamesBy appointment
Specialist · Thames Valley
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. We have rerun the numbers for every Thames Valley short-let client and can do the same for yours.
Holiday lets, by the numbers.
Apr 2025
When the FHL regime was abolished
32
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. We model each path before anything moves.
No. 02 / What's included
The work, line by line.
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
Most popular
2–4 holiday lets
From £155/mo
Most established short-let portfolios.
- Everything in single
- Portfolio reporting
- Mixed-use (long + short) split
- 60-min onboarding call
- Quarterly review
5+ holiday lets
From £240/mo
Multi-property short-let operators.
- Everything in mid plan
- Custom reporting
- Multi-platform reconciliation
- Disposal modelling included
FHL transition modelling is a one-off £450 fixed fee, included for the first month of any ongoing engagement.
I had a Marlow short-let on Airbnb and had been treating it as FHL for six years. They walked me through the post-FHL transition in two meetings, recovered £4,200 in stranded capital allowances, and put me on a clean monthly process.
No. 04 / Common questions
What landlords ask before booking.
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 will come back within one working hour with the right next step, no pitch.