From 6 April 2025, the tax treatment of Furnished Holiday Lettings (FHLs) is set to change significantly. If you’re a landlord letting holiday accommodation, you’ll need to understand how losses are relieved under the new system.
At Yorkshire Accountancy, we’re here to help landlords across Hull and beyond adjust to these changes with confidence.
What’s changing?
Until now, furnished holiday lets followed a special tax regime. Losses from holiday lets could only be carried forward and set against future profits from other FHLs — not against other rental income. Likewise, losses from residential lets couldn’t be set against FHL profits.
But from 2025/26 onwards, FHLs will be treated the same as other residential rental properties.
This means:
- One single property rental business
- All rental profits and losses pooled together
- Losses can be automatically offset against profits from other properties — including across FHLs and long-term lets
A quick example:
Leo owns two long-term rental properties and one holiday cottage.
In 2025/26:
- His long-term lets earn £38,100 profit
- His holiday let makes a £1,400 loss
- He also incurs £2,700 in general property business expenses
Under the new rules, Leo’s total rental profit is calculated by combining all income and expenses, including the holiday let loss. His overall profit is £34,000, and the holiday let loss is automatically relieved without needing a separate claim.
What about losses carried forward?
This is a key win for many landlords. If you have unrelieved FHL losses carried forward at 6 April 2025, those losses can now be used to reduce profits across all of your rental activity — not just holiday lets.
💡 Example:
Mary has £7,000 of unused FHL losses. In 2025/26, she earns £13,000 rental profit. She can now offset all £7,000 against that profit — something she couldn’t do before.
What this means for you
This change could reduce your future tax bills — but it’s important to get your figures right and maximise relief where available.
At Yorkshire Accountancy, we offer expert advice on property taxation, including how to manage FHL transitions, rental income, and loss reliefs. We’ll make sure you’re making the most of the rules.
📞 Contact our team today to review your property portfolio before the changes take effect.
