Liles Morris

Abolishment of Furnished holiday lettings tax regime confirmed

Talk to an expert

HM Revenue and Customs (HMRC) have published draft legislation and a policy paper outlining the proposal for the abolition of the furnished holiday lettings (FHL) tax regime. This was originally announced by the previous government and any hopes that this may be stalled by the new government are now laid to rest.


The new measures are proposed to take effect on or after 6 April 2025 for income and capital gains tax, and from 1 April 2025 for corporation tax.


The proposed revisions will remove the tax advantages that furnished holiday let landlords have over other property businesses, as follows:

  1. Loan interest will be restricted to the basic rate for Income Tax.
  2. Capital allowance rules for new expenditure will be removed and replaced with the replacement of domestic items relief available to other property businesses.
  3. Capital gains tax reliefs based on disposing a business asset will no longer apply to furnished holiday lets.
  4. Furnished holiday let income will no longer be included within relevant UK earnings when calculating maximum pension relief.

There are some specific transitional rules that will apply to these changes.

If you own properties that currently qualify for the FHL tax regime, we recommend that you review the effects that the change in legislation will have on you so that you can determine if you need to take any action. If you need any help with this, please do not hesitate to contact us, we would be pleased to help you.


See:
July 3, 2025
New Industrial Strategy to Slash Energy Bills and Back British Business

The UK Government has launched a major 10-year Industrial Strategy aimed at cutting business costs, creating over 1.1 million good skilled jobs, and making the UK a world leader in clean, competitive industries.

Read article
July 2, 2025
Earning Extra Income? You Might Need to File a Tax Return – Here’s What to Know

If you earn extra income from a side hustle, you could be legally required to register for Self Assessment and complete a tax return - and it’s better to get ahead of it now, rather than wait until the January deadline.

Read article