How short-let income is taxed since the holiday let rules ended

Until April 2025, short lets that met the "furnished holiday lettings" rules had their own, more generous tax treatment. That's gone. Short-let income is now taxed in much the same way as rent from a normal tenant. Here's what changed, in plain English. This is general information, not tax advice, so speak to an accountant about your own situation.

What ended in April 2025?

The furnished holiday lettings regime, often called FHL, was abolished from 6 April 2025 for Income Tax and Capital Gains Tax, and from 1 April 2025 for Corporation Tax. Deloitte summarises the change: the favourable tax treatment of furnished holiday lettings will be abolished with effect from 6 April 2025.

The ACCA, the professional body for accountants, explains that the change will remove the tax advantages holiday let landlords had over other property businesses.

What tax reliefs did owners lose?

1. Full mortgage interest relief. Before April 2025, qualifying holiday lets could deduct all their mortgage interest from their income. Now, the ACCA explains, loan interest will be restricted to basic rate for Income Tax, the same as for other landlords. For higher-rate taxpayers with a mortgage, that can mean a noticeably bigger tax bill.

2. Capital allowances on furniture. Owners could previously claim capital allowances on furniture and equipment. The ACCA says the change is removing capital allowances rules for new expenditure and allowing replacement of domestic items relief. In practice, you can claim for replacing items like a sofa or bed, but not for furnishing a home for the first time.

3. Capital Gains Tax reliefs when you sell. Some reliefs available when selling a qualifying holiday let, such as Business Asset Disposal Relief, are no longer available.

4. Pension contributions. Short-let profits no longer count as earnings when working out how much you can pay into a pension with tax relief.

What hasn't changed?

• You still pay tax on your profit, not your total bookings. Running costs such as cleaning, management fees, platform fees, utilities, insurance and repairs are generally allowable expenses.
• You still report short-let income, usually through Self Assessment.
• Council tax and business rates are a separate question. Read our Brighton council tax and business rates guide.

Are short lets still worth it after the tax changes?

For some owners, yes, especially higher-rate taxpayers with large mortgages. For many others, the difference between short-let income and rent is still large enough that short lets come out ahead after tax. The only way to know is to run your own numbers: income, every cost, and your tax position. Our short-let vs long-let calculator handles the income and costs; your accountant can add the tax.

What should you ask your accountant?

1. How much more tax will I pay now that mortgage interest relief is restricted?
2. Can I still claim for anything I've already bought for the home?
3. Should I own the home personally, jointly, or through a company?
4. What will my Capital Gains Tax bill look like if I sell in a few years?
5. Do I need to register for VAT, and how does VAT on platform fees affect me?

If this all sounds like hard work

It is. Pricing every night, answering guests at midnight, chasing cleaners and keeping up with fee changes is a job in itself. That job is what we do, for 12% + VAT of what each booking earns. If your home doesn't earn, neither do we.

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This is general information, not legal, financial, tax or insurance advice. Market figures are averages as of the date shown above and change every month. Speak to a qualified professional before you act on anything here.