Glossary · UK
What is Furnished Holiday Letting (FHL) — abolished April 2025?
A former UK tax regime for short-term holiday rental properties that granted trading-style tax advantages. The FHL regime was abolished from 6 April 2025; affected properties are now treated as standard residential lets.
Full Definition
The Furnished Holiday Letting (FHL) regime previously allowed short-term holiday rental properties meeting minimum availability and occupancy conditions to access tax reliefs normally reserved for trading businesses: full capital allowances on furniture and fixtures, Business Asset Disposal Relief (BADR) on disposal (10% CGT rate on qualifying gains), treatment of profits as relevant UK earnings for pension contributions, and flexible income splitting between spouses. The regime was abolished with effect from 6 April 2025 as announced at Spring Budget 2024. From that date, former FHL properties are treated as ordinary UK residential rental properties: mortgage interest is restricted to a 20% tax credit under Section 24, capital allowances on furniture are replaced by replacement of domestic items relief only, disposals are subject to 18%/24% residential CGT rates with no BADR, and profits no longer count as relevant earnings for pension purposes.