Guide for hosts
The furnished holiday lettings rules ended on 6 April 2025 for Income Tax and Capital Gains Tax, and on 1 April 2025 for Corporation Tax. A short let is now taxed like any other letting. Here is what that changes, and what it does not.
A let that used to qualify as a furnished holiday let is now part of your ordinary UK property business - or your overseas one, for a let abroad - and is "treated in line with all other property income and gains", in HMRC's words. Its profit goes on the property pages of your tax return with any other letting you have, and it pays no National Insurance.
No longer a cost taken off your profit. For an individual it gives a tax reduction of 20% of the interest instead, capped by your property profit and your income - the rule other landlords have had since 2020. A company still deducts it in full.
Capital allowances on new furniture and equipment for a let home have gone. Buying the first sofa is capital, with no relief; replacing it like for like is a cost, under replacement of domestic items relief. An existing capital allowances pool can carry on being written down.
Short-let profit no longer counts as relevant earnings, so it no longer adds to the pension contributions you can get tax relief on.
The reliefs that treated a holiday let as a business asset - such as Business Asset Disposal Relief, rollover relief and gift relief - end for disposals from April 2025, with limited rules for conditions already met before then. Contracts arranged from 6 March 2024 to get the old treatment do not work.
Short-let income is property income from the start. Mortgage interest has a line of its own and the 20% reduction is worked out for you; furniture bought for the first time is kept as capital, replacements as the relief. Your estimate says plainly what it cannot know, such as your other income.
Sources, read on 7 October 2026: GOV.UK, Abolition of the furnished holiday lettings tax regime; HMRC's Property Income Manual, PIM4180; HMRC's Capital Gains Manual, CG73505; GOV.UK, Work out your rental income.
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Airbnb, Booking.com and Vrbo are trademarks of their owners. Stoneledger Hosts is independent and not affiliated with or endorsed by them. This guide is general information, not tax advice; for your own circumstances, speak to a qualified adviser.