The furnished holiday let (FHL) tax regime is abolished by Finance Act 2025, s 25, Sch 5 from 6 April 2025 for income tax and capital gains tax purposes and from 1 April 2025 for corporation tax purposes. The following commentary sets out the transitional rules for income tax including FHL losses carried forward, corporation tax including FHL losses carried forward, capital allowances, capital gains tax including anti-forestalling rules, business asset disposal relief (BADR) and substantial shareholding exemptions.
HMRC guidance can be found at 'Clarification on abolition of the furnished holiday lettings tax regime'.
FHL abolition transitional rules for income tax
The abolition of the FHL provisions means that holiday lettings are now treated the same as other property income for the tax year 2025/26 and subsequent tax years1. Whether the activity could be treated as a trade is determined by the existing trading tests, for more details see B6.201. Therefore former FHL properties will be part of the person's UK or overseas property business as appropriate.
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Web page updated on 17 Mar 2025 17:26