Furnished Holiday Let (FHL)
Quick answer
A short-let property meeting the FHL availability and letting tests (210 days available, 105 days actually let, etc.). Treated as a trade for tax purposes until 5 April 2025, with full mortgage interest deduction, capital allowances on furniture and fittings, and Business Asset Disposal Relief on sale. From 6 April 2025 the FHL regime was abolished by the Finance Act 2024: existing FHLs fall under standard property income rules and Section 24 mortgage interest restriction applies in full.
At a glance
- Abolished
- 6 April 2025 (Finance Act 2024)
- Lost on abolition
- Full interest deduction, capital allowances, CGT reliefs
- Now taxed as
- Ordinary UK property business income
- Interest relief
- Basic-rate (20%) tax credit only, as for any let
Full guide
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Open full guideWhy Furnished Holiday Let (FHL) matters for landlords
The FHL regime was the last corner of residential letting that escaped Section 24, so short-let owners could still deduct mortgage interest in full and claim capital allowances and business-asset CGT reliefs. It ended on 6 April 2025. Anything published before then that recommends "moving to holiday lets to keep interest relief" is now wrong, and following it produces a tax bill nobody budgeted for. Existing FHL owners were moved into the ordinary property business rules with transitional provisions, so the planning question is no longer whether to qualify but whether short-letting still pays after tax.
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Official sources
LetCompliance editorial reviews this entry every quarter against the sources above. Always confirm specific duties with a qualified solicitor or your local council.
Related terms
Capital Allowances
Tax relief for capital spending on qualifying "plant and machinery". For a standard residential letting they are generally NOT available — furniture and appliances are covered instead by Replacement of Domestic Items Relief. Capital allowances mainly apply to equipment in the communal areas of some HMOs and to commercial property; the furnished holiday let regime that allowed them was abolished from April 2025.
Rent a Room Relief
A scheme letting you earn up to £7,500 a year tax-free from letting a furnished room in your own home. The threshold halves to £3,750 if someone else (for example a partner) also receives income from the same letting. It applies to resident landlords with a lodger, not to a separate buy-to-let property.
BTL (Buy-to-Let)
A mortgage product and business model where a property is purchased specifically to rent out. Buy-to-let landlords are subject to Section 24 of the Finance Act 2015, which replaced mortgage interest relief with a 20% tax credit. Stamp duty is higher on a second property.
Capital Gains Tax (CGT)
Tax on the profit from selling a rental property. From April 2024 the CGT annual exempt amount was reduced to £3,000 and residential property gains are taxed at 18% (basic rate) or 24% (higher rate). A CGT return must be filed and tax paid within 60 days of completion.
Inheritance Tax (IHT)
A tax on the value of an estate on death, charged at 40% above the tax-free threshold. Rental property counts in the estate at its market value less any outstanding mortgage. The nil-rate band is £325,000, with a further residence nil-rate band potentially available when a main home passes to direct descendants.
Let Property Campaign
An HMRC disclosure facility that lets UK residential landlords come forward voluntarily about undeclared rental income from earlier years. In return for disclosing before HMRC opens an enquiry, landlords self-assess a reduced penalty: as low as 0% where there is a reasonable excuse, typically around 10–20% for an unprompted careless disclosure, rising toward 100% of the tax for deliberate concealment that HMRC discovers first. After registering an intention to disclose, the landlord has 90 days to calculate and pay the tax, interest and penalty.