Home » Blog » Furnished Holiday Lets relief to be abolished

Furnished Holiday Lets relief to be abolished

Our Guide to the abolition of FHL

According to the Spring Budget 2024, as of April 2025, owners of furnished holiday lets will lose their entitlement to certain specific tax advantages as the FHL scheme is set to be abolished.

These proposed changes seem to be in response to the UK’s housing supply issue, as the Government move to support long-term residential properties in popular tourist areas where second home owners may have been profiting at the expense of first time home owners.

As we wait for specific details to be released, here is everything that we know so far;

What is FHL?

Currently, if you own a property that you rent out on a short term basis for holiday rentals, subject to certain qualifying conditions, you may benefit from the Furnished Holiday Lets (FHL) scheme.

According to HMRCs guidance, FHLs are properties that are available for letting as furnished holiday accommodation for at least 210 days in a year, and actually let as furnished holiday accommodation for at least 105 days in a year. Guests must not occupy the property for more than 30 days.

Compared to other rented properties, FHLs currently offer several tax advantages not available to landlords who let out residential properties to longer-term tenants.

These include;

• claiming capital allowances
• deductable mortgage interest
• various capital gains tax reliefs not available to other let properties
• allocating profits on rental income as earnings for pension purposes

What impact will these changes have?

From 6th April 2025, short and long  term lets will be treated the same for tax purposes.

The abolition of FHL will eliminate the tax advantages (listed above) currently enjoyed by landlords who let furnished properties to holiday makers on a short term basis.

FHL owners will;

• be subject to standard residential capital gains tax rates
• no-longer be able to claim capital allowances for fixtures and fittings
• no-longer be permitted to deduct mortgage interest from profits
• no-longer be allowed to allocate profits on rental income as net relevant earnings for pension contributions 

In simple terms, from the 6th April, it will cost property owners more to operate a furnished holiday let. However, there is still time to talk to your accountant about overall tax planning, including sale and transfer of property, before FHL relief is abolished.

Please get in touch if you have any questions or concerns, our professional team will be happy to help. 

Find out more about our specialist accountancy services for property and landlords.