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This guidance note sets out the qualifying conditions for a property let to be treated as a furnished holiday let (FHL) for tax purposes and the tax implications. The FHL tax regime is abolished from April 2025, further details are set out below and HMRC has issued additional guidance, see ‘Clarification on abolition of the furnished holiday lettings tax regime’.

Whether or not a property qualifies as an FHL could make an important difference to the taxation implications prior to April 2025. In particular, the letting of furnished holiday accommodation could benefit from a more beneficial regime in some respects. The main benefits of an FHL is that it is treated like a trade for certain purposes which can be advantageous for the purposes of capital allowances, capital gains reliefs, interest costs, pension contributions and national insurance, see more details on each of these areas below.

See also Simon’s Taxes B6.4 and HMRC Helpsheet HS253.

There are two possible bases of assessment that can be used to calculate UK FHL business and EEA FHL business profits and