**Please note:<\/strong> Autumn 2024 Budget announcement –\u00a0While the specific benefits for FHLs have been removed as of April 2025, properties that qualified as FHLs in the 2024-25 tax year will still benefit from the previous rules regarding their tax return for that year.<\/p>\n Read on for information about the old and new tax rules to help you navigate these amendments. Click here for full GOV.UK details about the Abolition of the furnished holiday lettings tax regime<\/a>.<\/p>\n Stone Cross Mansion Apartments, Ulverston<\/p><\/div>\n <\/p>\n Prior to 6th April 2025<\/strong> (1st April 2025 for limited companies), a property could qualify as a Furnished Holiday Let if it met the following criteria:<\/p>\n To qualify as an FHL, your property must:<\/p>\n To be recognised as a Furnished Holiday Let (FHL) in the final year of the tax regime, you’ll need to have your property available for rental before<\/strong> April 6, 2025 (or April 1, 2025, for limited companies). Plus, it’s important that you meet the FHL qualifying criteria within the 12-month period following the date your property first became available for letting.<\/p>\n For example, if you put your property on the market for rent on March 10, 2025, you can still qualify as an FHL for the 2024\/25 tax year, provided you fulfil the FHL requirements by March 9, 2026.<\/p>\n The key benefit of qualifying as an FHL during the 2024\/25 tax year is that you’ll have the opportunity to claim capital allowances on your setup costs. You may also qualify for deductions on expenses related to buying, building, refurbishing, or converting your property into a holiday let.<\/p>\n **<\/strong>Your property will cease being a Furnished Holiday Let if it is either sold, or used for private occupation.<\/p>\n For more information about the requirements for a FHL, take a look at the HS253 Helpsheet.<\/a><\/p>\n Hawkrigg Farm, Far Sawrey Ref. 1041275<\/p><\/div>\n Got a tax question? Zeal<\/a> have a free helpline for Sykes and sister brand owners, get in touch via Sykes@gozeal.co.uk and as a Sykes and brand owner you have the benefit of exclusive 10% discount on standard fees.<\/strong><\/p>\n Starting from<\/strong> April 2025<\/strong>, the tax benefits previously enjoyed by owners of Furnished Holiday Lets will no longer<\/strong> be available. Moving forward, the regulations have shifted, and the opportunity to take advantage of these perks has been removed. That said, these rules still apply to properties that were recognized as FHLs during the 2024-25 tax year, as detailed previously.<\/p>\n FHLs currently allow you to deduct the cost of furnishing the property via capital allowances.<\/p>\n You can currently deduct all mortgage interest from your profits, unlike standard residential lets.<\/p>\n Profits from FHLs count as relevant earnings<\/strong>, allowing you to make tax-relieved pension contributions<\/strong>.<\/p>\n FHLs may qualify for:<\/p>\n Note: FHL businesses must cease operation before the cut off date<\/strong> to qualify for post-repeal CGT reliefs. For more information on this, see the HS253 Helpsheet<\/a>.<\/p>\n If you co-own a Furnished Holiday Let (FHL), you had the flexibility to distribute profits among the legal owners based on your preferences for tax reasons. In contrast, with long-term rental properties, profits had to be divided according to the official ownership percentage\u2014meaning, if you owned 50% of the property, you received 50% of the profits. For FHLs, however, you had the freedom to allocate profits as you saw fit, but they are now categorized the same way as long-term rentals.<\/p>\n For more information, see this\u00a0Trusts, Settlements and Estates Manual<\/a>.<\/p>\n Image credit Chay_Tee<\/p><\/div>\n Starting from the 6th April 2025<\/strong> (1st April 2025 for companies),\u00a0the FHL tax relief regime will be abolished and the current tax benefits for individuals, companies, and trusts operating a qualifying FHL business will no longer apply. This means\u00a0FHLs will be taxed in the same way as long-term residential or commercial lets.<\/p>\n From the 2025\/26 tax year, the FHL regime is being abolished. Here\u2019s what that means:<\/p>\n If you exchange contracts after 6 March 2024<\/strong> but complete after 5 April 2025<\/strong>, you won\u2019t qualify<\/strong> for the old reliefs.<\/p>\n Find out more about the\u00a0rules and legal<\/a> requirement<\/a>s<\/a> for letting a holiday property<\/a>.<\/p>\n If the turnover on your FHL exceeds the VAT threshold which is currently \u00a390,000, you will need to become VAT registered. Currently the standard VAT rate applicable is 20%. The threshold is set at around \u00a37,500 per month which most holiday lets are unlikely to achieve unless it’s a large house or high end, luxury property. This means you’ll most likely have to own more than one holiday let before VAT becomes something to think about.<\/p>\n For more GOV.UK information about VAT on Holiday accommodation<\/a><\/p>\n Bank Barn, Wreay Ref. 1160532<\/p><\/div>\n Allowable expenses are applicable for tax relief for qualifying Plant & Machinery (P&M) assets used in a business, e.g include furniture, furnishings, equipment,<\/strong> and also hot tubs for holiday lets<\/strong>.<\/p>\n Although holiday let owners won’t be able to claim capital allowances on new purchases made after April 2025, they can still benefit from the ‘Replacement of Domestic Items Relief’ for certain replacements. Domestic items eligible for this relief may include:<\/p>\n However, new holiday let properties after April 2025<\/strong>, will no longer be able to claim capital allowances on the initial purchase of these assets, so to claim tax relief will only apply to replacements.<\/p>\n For more detailed information about Furnished Holiday Let Tax Guide, please click here<\/a> to view our sister brand blog page with Sykes Holiday Cottages<\/p>\n In the UK, purchasing a second property, which is not your primary residence, could result in a Stamp Duty Land Tax surcharge. As of 31st October 2024, the surcharge will be 5% in England (up from 3%), while in Wales, it remains at 5% (referred to as Land Transaction Tax). In Scotland, the rate is higher, set at 8% (known as Land and Buildings Transaction Tax).<\/p>\n Read our guide to Stamp Duty for holiday lets<\/a> which provides further information.<\/p>\n FHLs available for let at least 140 days per year may be assessed for business rates<\/strong> instead of council tax. Many small FHL businesses may be eligible for Small Business Rate Relief<\/strong>, reducing your rates bill to \u00a30<\/strong> in some cases.<\/p>\n More info here \u00a0Guidance on business rates for holiday lets<\/a><\/p>\n Most FHLs do not qualify<\/strong> for Business Property Relief (BPR) for IHT purposes, unless you provide substantial services<\/strong> such as daily housekeeping or catering \u2014 something more akin to running a hotel.<\/p>\n Read guidance here HMRC guidance on IHT and FHLs<\/a><\/p>\n With growing concern over housing shortages, some councils \u2014 including those in the Lake District <\/strong>have introduced or proposed stricter licensing, caps, or planning regulations on holiday lets. Always check with your local authority.<\/p>\n From April 2026<\/strong>, if your property income exceeds \u00a350,000<\/strong>, you\u2019ll be required to comply with Making Tax Digital for Income Tax Self Assessment<\/strong>. This includes keeping digital records and filing quarterly summaries<\/strong> with HMRC.<\/p>\n Up to date info here \u00a0Making Tax Digital explained<\/a><\/p>\n We know it can very difficult getting your head around tax for holiday lets, especially if you’re new to letting. That’s why we’ve partnered with tax experts\u00a0Zeal<\/a>; to make sure that you’re not missing out on potential tax savings on your holiday let property.<\/strong><\/p>\n Looking to buy or change agencies, contact our local team here in the Lakes, phone us on ![\"\"](\"https:\/\/www.lakelovers.co.uk\/blog\/wp-content\/uploads\/sites\/15\/2024\/05\/Blog-images-640x427-49.png\")
<\/a>
\nWhat is a Furnished Holiday Let?<\/h3>\n
\n
![\"\"](\"https:\/\/www.lakelovers.co.uk\/blog\/wp-content\/uploads\/sites\/15\/2019\/09\/Blog-images-640x427-60.png\")
<\/a>
\nWhat were the tax advantages of running a Furnished Holiday Let?<\/h3>\n
Holiday Let Tax Deductible Expenses<\/h4>\n
Capital Allowances<\/h4>\n
Full Mortgage Interest Relief<\/h4>\n
Pension Contributions<\/h4>\n
Capital Gains Tax Reliefs<\/h4>\n
\n
Split profits between joint owners to maximise tax<\/h4>\n
![\"\"](\"https:\/\/www.lakelovers.co.uk\/blog\/wp-content\/uploads\/sites\/15\/2019\/09\/Blog-images-640x427-2025-04-24T162859.770.png\")
\nNEW changes from April 2025?<\/strong><\/h3>\n
\n
Anti-Forestalling Rule<\/h4>\n
\nPaying VAT on a Furnished Holiday Let<\/h3>\n
\n![\"\"](\"https:\/\/www.lakelovers.co.uk\/blog\/wp-content\/uploads\/sites\/15\/2019\/09\/Blog-images-640x427-61.png\")
<\/a>What are classed as Holiday Let Tax deductible expenses?<\/h3>\n
\n
\nStamp Duty Land Tax (or equivalent)<\/h3>\n
\nBusiness Rates vs Council Tax<\/h3>\n
\nInheritance Tax (IHT) Considerations<\/h3>\n
\nLocal Licensing Rules<\/h3>\n
\nMaking Tax Digital (MTD) for All Landlords<\/h3>\n
<\/h3>\n
\nNeed some more advice?<\/h3>\n