Furnished Holiday Lets Lose Their Tax Perks: What Changes on Your 2025/26 Return

Mike Jackson FCCA

Aug 20

2 min read

Updated: Oct 24

The end of an era for FHL owners

The Furnished Holiday Lettings (FHL) regime was abolished from 6 April 2025, and 2025/26 is the first full tax year in which FHL owners are taxed under exactly the same rules as standard residential landlords.

What's actually changed

Mortgage and finance costs: now restricted to a basic-rate (20%) tax credit rather than full deduction.
Capital allowances: gone — replaced by the standard replacement-of-domestic-items relief regime.
Capital Gains Tax reliefs: reliefs such as Business Asset Disposal Relief no longer apply on disposal.
Joint ownership: couples who jointly own an FHL need to get to grips with new income-splitting rules, generally more rigid than under the old FHL regime.

Why this matters for your return

None of these changes are optional. If you haven't already reviewed your holding structure or finance arrangements, the 2025/26 return is where the impact will show up.

How Jackson Lee can help

As an ACCA-qualified firm based in Bury, we work with landlords across Greater Manchester and Lancashire, including several with furnished holiday lets affected by this change.

FAQs

Does this affect FHLs I sold before April 2025? No, those disposals were under the old FHL rules.

Can I still claim tax relief on furniture I buy for my holiday let? Not in the same way — you now fall under the replacement-of-domestic-items relief regime.

I co-own my FHL with my spouse — what should I check first? Review how your income will now be split under standard jointly-owned property rules.

If you own a furnished holiday let and want to understand how this affects your return, contact Jackson Lee (https://www.jacksonleeaccountants.co.uk/contact-me).

Need a hand with this? We're accountants in Bury, and our self assessment tax return service covers it for a fixed fee.

Talk it through with us

If this affects you, book a free, no-obligation 30-minute chat by phone, Teams or at our Bury office, or see your fixed fee online in 2 minutes. Prefer to talk now? Call 0161 327 0047.

Sources: Abolition of the FHL regime (https://www.gov.uk/government/publications/furnished-holiday-lettings-tax-regime-abolition) · ICAEW: Dealing with FHLs on your 2025/26 return (https://www.icaew.com/insights/tax-news/2026/jun-2026/how-to-deal-with-furnished-holiday-lets-in-2025-26-tax-return)