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FHL Transition Checklist
What changed for furnished holiday let owners now that the FHL tax regime has ended — mortgage interest, capital allowances, Capital Gains Tax and losses, in one page.
Please read before using: This checklist is general guidance only and does not constitute tax or legal advice. The FHL rule changes have real Capital Gains Tax and income tax consequences depending on your individual circumstances. Please confirm your position with HMRC guidance or a qualified accountant before acting, especially around CGT disposals and Form 17 elections.
What’s Included
- Mortgage interest & finance costs — how the 20% tax credit restriction (Section 24) now applies to furnished holiday lets, the same as standard residential lets.
- Capital allowances — what you can and can’t still claim on furniture and equipment, and what happens to an existing capital allowances pool.
- Capital Gains Tax — the standard residential rates that now apply on disposal, and which reliefs (Business Asset Disposal Relief, Rollover Relief, Holdover Relief) were withdrawn.
- Losses, income splitting & pensions — how brought-forward FHL losses are reclassified, the new 50:50 default for couples, and the pension relevant-earnings change.
- A quick action checklist — six things to check before your next Self Assessment return.
Why This Matters
- The Furnished Holiday Lettings regime was abolished from 6 April 2025. FHL properties are no longer treated as a trading-style business for tax purposes — they’re taxed under the same rules as any other UK or overseas property letting business.
- Several reliefs that made FHLs attractive — full mortgage interest deduction, capital allowances on furnishings, trading-asset CGT reliefs, and counting profit as relevant earnings for pensions — have all been withdrawn or restricted.
- Married couples and civil partners who previously split FHL income flexibly now default to a 50:50 split unless they hold unequal beneficial ownership and make a Form 17 election — which isn’t backdated.
- Getting the transition wrong on your first post-abolition tax return is an easy way to over- or under-pay — this checklist is designed to be checked against your own figures in a few minutes.
Frequently Asked Questions
The Furnished Holiday Lettings regime was abolished from 6 April 2025 for individuals, partnerships and trusts. From that date, FHL properties are taxed under the same rules as any other UK or overseas property letting business.
Only on an existing capital allowances pool built up before 6 April 2025 — you can keep claiming writing-down allowances on that. No new expenditure after that date goes into the pool; instead you use replacement of domestic items relief, as other landlords do.
Standard residential property CGT rates apply: 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers. The more favourable trading-asset reliefs — Business Asset Disposal Relief, Rollover Relief and Holdover Relief — were withdrawn for FHLs from 6 April 2025.
The checklist is free to download. It is general guidance, not tax or legal advice — please confirm your own position with HMRC guidance or a qualified accountant before acting, as stated in the disclaimer on the page and in the PDF itself.
Sources
- GOV.UK — Changes to the tax treatment of Furnished Holiday Lettings (checked 2026)
- HMRC Property Income Manual
- Finance Act 2025 abolition provisions and HMRC guidance on transitional/anti-forestalling rules