Last Updated on July 31, 2025
A furnished holiday let (FHL) is an attractive investment option for many landlords.
They offer flexibility, strong short-term income potential, and, until recently, favourable tax treatment.
But to succeed in this sector, it’s important to understand the rules, stay on top of upcoming changes, and ensure your property is legally compliant and efficiently run.
Here’s what you need to know about furnished holiday let rules in the UK — including major tax changes due in April 2025.
What are the rules for furnished holiday letting in the UK?
To qualify as a furnished holiday let, your property must meet specific HMRC conditions. It must be located in the UK or European Economic Area, be fully furnished, and let on a commercial basis with the intention of making a profit.
The property must be available to let for at least 210 days in the tax year and actually let to paying guests for at least 105 of those days.
Importantly, guests should not occupy the property for more than 31 consecutive days at a time, and longer-term bookings are limited in number.
If these conditions aren’t met, HMRC will treat the property as a standard residential rental, meaning it won’t benefit from FHL tax rules.
What are the new tax rules on furnished holiday lets in the UK from April 2025?
From April 2025, the government is scrapping the separate furnished holiday letting tax regime. This means furnished holiday lets will be taxed in the same way as other residential rental properties.
The main consequences include the removal of capital allowances (which currently allow you to deduct the cost of furniture and equipment), the loss of certain capital gains tax reliefs such as Business Asset Disposal Relief, and a cap on mortgage interest relief, which will be restricted to the basic 20% tax credit like other rental properties.
This change could significantly impact profitability for landlords operating furnished holiday lets, and professional tax planning will be more important than ever.
What is the 10-year rule for holiday lets?
The so-called “10-year rule” isn’t a tax rule, but rather a planning condition sometimes imposed by local councils.
It means that a property must be used continuously as a holiday let for ten years before it can potentially be considered for a change of use or sold as a residential home without triggering enforcement action.
This rule is designed to prevent short-term let owners from flipping properties back into the housing market too easily in areas where housing is in high demand.
Always check with your local planning authority before assuming a property can be reclassified or repurposed.
Do you pay council tax on furnished holiday lets?
Whether you pay council tax or business rates on a furnished holiday let will depend on how often the property is available to guests. If your property is available to let for fewer than 140 days a year, it’s usually subject to council tax.
If it’s available for 140 days or more, it may be classed as a self-catering property and assessed for business rates instead.
In the UK, if your rateable value is under £15,000, you may qualify for small business rate relief, potentially bringing your bill to zero.
It’s essential to register with your local council and provide accurate letting information to avoid penalties.
A row of typical British terraced houses around Hammersmith in London
What expenses can I claim for a furnished holiday let?
FHLs allow landlords to claim a range of expenses against their rental income, including cleaning and maintenance costs, utility bills, insurance, council tax or business rates, advertising and letting agent fees, and a portion of mortgage interest.
You can also claim for replacements of domestic items such as furniture and appliances.
However, from April 2025, capital allowances — currently one of the biggest tax advantages of FHLs — will be removed.
This means you won’t be able to deduct the cost of furniture or fittings unless they qualify under separate replacement relief rules.
An experienced furnished holiday let accountant can help you understand which expenses are still valid and how to structure your finances efficiently.
What are the legal requirements for a holiday let?
Letting a holiday property comes with a number of legal obligations. Landlords must comply with fire safety regulations, carry out regular gas and electrical safety checks, and ensure working smoke and carbon monoxide alarms are installed.
An Energy Performance Certificate (EPC) with a minimum rating of E is required, and you should also have suitable public liability insurance in place.
In addition, local authorities may have their own requirements or restrictions, especially in high-demand areas, so it’s important to stay informed about local policies.
Do I need an accountant for a holiday let?
While you’re not legally required to use an accountant, the benefits of doing so are significant — especially now.
A furnished holiday let accountant can help you navigate the upcoming tax changes, identify allowable expenses, assist with annual reporting, and offer advice on ownership structures, such as whether to hold the property personally or through a limited company.
They can also guide you through capital gains planning, particularly if you’re thinking of selling before the April 2025 rule change.
For many landlords, the savings gained from good accounting advice far outweigh the costs.
Do I need a licence for a holiday let in the UK?
Licensing rules vary depending on location.
In Scotland, all short-term lets now require a licence from the local authority.
In Wales, new registration and planning rules are being introduced in designated areas to control the number of holiday lets.
In England, there is currently no national licensing scheme, but some councils — particularly in London and other high-tourism areas — do require licences or impose planning restrictions.
It’s crucial to check with your local council to find out what rules apply to your area, as non-compliance can lead to enforcement action or fines.
What is the tax rate for furnished holiday lettings?
Currently, income from FHLs is taxed at your usual income tax rate — 20%, 40%, or 45% — depending on your total income.
However, under the current FHL regime, landlords can deduct full mortgage interest, claim capital allowances, and potentially benefit from certain capital gains tax reliefs, making the effective tax burden much lower than that of a standard rental.
From April 2025, these benefits will disappear.
All property income will be taxed under the standard rules, which means reduced deductibility of interest and the loss of business-related tax reliefs. Now is the time to review your tax position and explore restructuring options.
Is Airbnb a furnished holiday let?
Airbnb properties can qualify as furnished holiday lets, but only if they meet HMRC’s criteria. This includes the number of days the property is available and actually let, the level of furnishing, and the commercial nature of the letting.
Simply listing a property on Airbnb isn’t enough — you must manage it as a genuine short-term rental business.
If your Airbnb property meets the criteria, it can currently benefit from the FHL tax regime — but that advantage will end in April 2025.
Furnished holiday lets are still a valuable investment — but the rules are changing fast. With the upcoming abolition of the FHL regime in April 2025, landlords must adapt to a new tax environment.
Now is the time to plan, restructure if necessary, and make sure you’re compliant with legal and local requirements.
At Property Tax International, we specialise in helping landlords understand their tax obligations, plan strategically, and make the most of their property investments.
Speak to one of our furnished experts today to prepare for the future with confidence!