UK Holiday Let Owners Face Last Chance to Claim Tax Breaks

The UK's furnished holiday lettings (FHL) tax regime closed on April 6, 2025, and the self-assessment deadline on January 31 is the last point at which owners can claim its benefits, on returns covering the 2024-25 tax year. After that, holiday let income is taxed the same way as any other residential letting, with no special treatment for mortgage interest, equipment costs or pension eligibility.

What disappears from the tax return

Under the old rules, owners of qualifying holiday lets could deduct mortgage interest in full from rental income before tax. That advantage is gone. Holiday let owners now face the same restriction long-term residential landlords have lived with since 2020: interest costs are given as a 20% tax credit rather than a full deduction, which pushes up the effective tax bill for anyone with a mortgage on the property. Capital allowances on furniture, appliances and fixtures also stop applying; owners can no longer write off the cost of kitting out a property against income the way they could under FHL status.

Capital gains and pension reliefs also end

The changes reach beyond annual income tax. Business Asset Disposal Relief, which let qualifying FHL owners pay a reduced 10% capital gains rate on sale, no longer applies to holiday lets sold after the cutoff. Rollover relief, which allowed gains to be deferred when proceeds were reinvested in another qualifying business asset, is gone too. Profits from a former FHL also no longer count as relevant earnings for pension contribution purposes, which matters for any owner who was using rental income to justify higher pension payments.

What to check before the January 31 deadline

Owners filing for 2024-25 should first confirm the property actually met the FHL qualifying tests for the period the old rules still applied: available to let for at least 210 days in the year and actually let for at least 105 days, with no single letting running longer than 31 continuous days for more than 155 days total. Missing those thresholds retroactively disqualifies the claim even for the final year. Second, capital allowances claimed on furniture and equipment purchases should be logged now, since this is the last return where they can be set against income in the usual way. Third, anyone who split rental income between spouses to manage tax bands should check whether that split still works once ordinary property income rules apply, since FHL allowed a flexibility that standard letting income does not. Fourth, owners nearing a sale should get advice on whether completing before or after the cutoff affects the capital gains rate available. Fifth, anyone carrying forward losses from a former FHL should confirm how those losses can be used against future property income, since the transition rules restrict how freely they carry across.

None of this changes what platforms charge or how bookings work. It changes what owners keep after tax, and for many the difference will show up as soon as this year's return is filed.