Furnished Holiday Lettings Abolished from April 2025: What Every UK Landlord Needs to Do Now

Why the End of FHL Matters for Property Investors

For years, the Furnished Holiday Lettings (FHL) regime gave landlords generous tax breaks — from capital allowances to business asset CGT reliefs. But from 6 April 2025 (for Income Tax & CGT) and 1 April 2025 (for Corporation Tax), the FHL regime was abolished.

Now, holiday lets are treated the same as standard buy-to-lets. Landlords must navigate new rules, transitional issues, and the loss of reliefs that previously boosted returns.

This guide explains exactly what changed, what landlords lose, and how to adapt.

What Changed from April 2025

From the April 2025 tax year:

• The FHL regime no longer exists for Income Tax, Corporation Tax, and Capital Gains Tax.

• All rental income from holiday properties is treated as standard property business income.

• The beneficial rules specific to FHLs were abolished.

Reliefs & Allowances Landlords Lost

Key tax advantages withdrawn include:

• Capital Allowances – no longer available on furniture, fixtures, or equipment (must now use Replacement of Domestic Items Relief like other landlords).

• Business Asset Disposal Relief (BADR) – 10% CGT rate no longer applies on sale of holiday lets.

• Rollover Relief & Gift Holdover Relief – no longer available for FHLs.

• Pension Contributions – landlords cannot treat FHL profits as “relevant earnings” for pension relief.

Transitional Issues for 2025/26

HMRC introduced limited transitional rules to smooth the change:

• Relief may apply to certain disposals if contracts were exchanged before 6 March 2024 (Budget day).

• Capital allowances pools may require adjustments when moving into the new regime.

• Losses carried forward from FHLs can only be offset against future general property income, not treated as trading losses.

Moving to Standard Property Rules

From 2025/26 onwards, landlords must follow the same rules as standard property businesses:

• Rental profits taxed under Income Tax (individuals) or Corporation Tax (companies).

• No special treatment for short-term letting — the length of stay no longer matters.

• Relief limited to normal allowable expenses and replacement of domestic items.

Practical Steps for Landlords Now

To stay compliant and protect profits, landlords should:

• Review financing and business models — higher tax bills may affect cash flow.

• Reassess mortgage structuring in light of Section 24 interest restrictions.

• Consider incorporation if operating multiple properties.

• Plan disposals carefully to avoid higher CGT liabilities.

How Wexley Guides Clients Through the Change

At Wexley & Associates, we help landlords:

• Recalculate tax liabilities under standard property rules.

• Adjust capital allowances and loss reliefs during transition.

• Optimise ownership structures to minimise future tax exposure.

• Navigate CGT planning and disposal strategies.

Our forward-looking approach ensures landlords stay compliant while maximising long-term returns.

Adapt Now to the New Property Tax Landscape

The end of FHL is one of the biggest shifts in landlord taxation in years. Without proper planning, landlords risk higher tax bills and missed opportunities.

Contact Wexley & Associates today for bespoke advice on restructuring your property business in light of the 2025 FHL changes.

References

• GOV.UK — Changes to Furnished Holiday Lettings regime (Spring Budget 2024 update)

• HMRC Property Income Manual — Furnished Holiday Lettings (archived & transitional)

• GOV.UK — Rental Income Tax Guide

• [Related Wex Insider article: Allowable Expenses & Replacement of Domestic Items Explained]