Furnished Holiday Let Tax Guide 2025

by Gaynor Anderson / Owners

There are several benefits to owning and operating a holiday let. It gives your family and friends great holidays, but it also has the potential to provide a sizable side income too.

This article discusses the NEW tax rules for Furnished Holiday Lets (FHLs) from April 2025, which is important to consider if you own or are planning to invest in a holiday let with Northumbria Coast and Country Cottages.

What is a Furnished Holiday Let?

For residences that meet the requirements located in the UK and Northern Ireland (as well as other European nations), a Furnished Holiday Let, often known as an FHL, is a specific kind of rental property classification.

Before April 2025, owners of holiday lets could benefit from specific tax advantages under this classification. The HMRC had several requirements that a property must fulfil in order to be classified as an FHL, including availability, real bookings, and furniture quality.

Marmalade Cottage, Seahouses Ref. 1121980

How did properties qualify to be a FHL?

Before the changes on April 6th 2025, to qualify as a Furnished Holiday let your property had to meet the following criteria:

Your property must be furnished

While it might seem a bit obvious, it is a requirement. The amount of furnishings required by the guidelines is not specified, but you should attempt to supply everything you would expect from a self-catering holiday home.

NC&CC experienced property consultants and local team will be able to advise you on how best to achieve this.

Intend to make a profit

In order to make a profit, the property must be leased on a commercial basis. Your intention matters more than whether you actually make a profit. If you have a business plan or if you’ve listed your property with a professional holiday let agency like us this will be easier to prove your intention

Be available to let

The first 12 months of qualifying for a FHL, your property will be put in a ‘probationary’ period. Your properties calendar availability will be under review to achieve the FHL status in becoming a more permanent feature. So in the first year your property must:

Have open availability to let for 210 days or 30 weeks
Be let commercially as a holiday property for 105 days or 15 weeks
If occupied by the same person or people for more than 31 days, there must not be more than 155 days of these longer lettings in total across the year.

Note: Any days that you, your friends or family spend in the property, for free or at a discounted rate, do not count towards the total commercial occupation requirements.

While this requirement may seem rather strict, there is some reasonable flexibility if you are:

Unable to meet the required occupation figures – These figures can be averaged out across multiple FHL properties – however, properties in the Republic of Ireland are considered separate to the rest of the UK.
Unable to meet the actual occupation figure (after your ‘probationary’ period) – If during the previous year you met the occupation requirements, a period of grace can be granted (for a maximum of two consecutive years). This means you will retain your FHL status, providing you meet the occupation requirements going forward

When does a property stop being a furnished holiday let?

A property will no longer qualify as a FHL if it meets one of the following points:

The property is sold
The property is being used for private occupation
The letting conditions are not met, including election averaging and period of grace elections

Note: While 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 above rules regarding their tax return for that year.

For current information on FHL requirements, view the HS253 Helpsheet.

Key Points of the 2025 FHL Tax Changes:

Abolishment of FHL Tax Relief:

As of April 6, 2025, the specific tax reliefs for FHLs have been abolished. This means that FHLs will now be taxed similarly to long-term residential or commercial lets

Criteria for FHL Status:

To qualify as an FHL, your property must be:

Located in the UK or the European Economic Area (EEA)
Furnished to a standard suitable for normal occupation
Available for letting at least 210 days a year
Let commercially for at least 105 days a year

Tax Advantages (Prior to April 2025):

Before the changes, FHLs benefited from several tax advantages, including:

Capital Gains Tax reliefs.
Plant and machinery capital allowances
Profits counting as earnings for pension purposes

For more information on capital allowances, view the HS252 Helpsheet

Allowable Expenses:

You could claim expenses such as mortgage interest, repairs, and maintenance, which helped reduce your taxable profit

Read our sister company blog for more details and listen to our Podcast on 2025 Furnished Holiday Let Tax Changes

Sykes Cottages & Local Brands partnership with Tax Experts Zeal

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 chartered tax advisors Zeal; to make sure that you’re not missing out on potential tax savings on your holiday let property and we are pleased that all our Northumbria Coast & Country Cottages owners can benefit from an exclusive discount.

Would you like more detailed information on any specific aspect of FHL taxation? contact Zeal today on 01633 499771 or email sykesfamily@gozeal.co.uk

Recommendations:

Seek Professional Advice: Given the complexity and recent changes, it’s advisable to consult with a tax professional to understand how these changes specifically impact your situation.
Stay Updated: Regularly check for updates from reliable sources like HMRC and professional tax advisors to stay informed about any further changes.

If you require advice regarding Stamp Duty read our helpful blog on Stamp Duty for Holiday Lets

Let with Northumbria Coast and Country Cottages

Interested in letting your property with a local company? We’re here to help, guide and keep you up to date with current legislation. Complete our owner form here, phone us on 01665 830783, or pop into our local office in Alnmouth or Seahouses.

Disclaimer

The advice above is given by Zeal. Northumbria Coast and Country Cottages can’t advise you on, and isn’t responsible for, tax matters in relation to your holiday let and the above should not be taken as such, rather as a prompt of the issues involved for further consideration. As always, please read the relevant laws, regulations and guidance and seek advice from external experts where you require it. Northumbria Coast and Country Cottages hopes that by pointing you in the direction of an expert in the field, it’s starting you off on the right foot, and you can read into this matter further and seek your own advice from Zeal, or your chosen advisor, as and when you feel it’s needed. We cannot make any representations or warranties of any kind as to the competency, qualification, fitness for purpose, accuracy, reliability, suitability, or availability of Zeal’s offers, products or services. If you choose to enter into any arrangement for the supply of goods or services of a supplier listed in this newsletter or links, you do so entirely at your own risk. Any such arrangement is between you and the supplier. We are not a party to it. We shall not be liable for any loss or damage arising under or in connection with any such arrangement or any action or decisions you take or do not take as a result of reading the above or any loss suffered as a result.