Holiday lets after April 2025: what changed when the special tax rules ended
Since April 2025, holiday lets are taxed like any other rental. What owners lost, what carries on, and the checks to make this year.
For many years, furnished holiday lets were taxed more like a trade than an investment. That ended on 6 April 2025 for income tax and capital gains, and on 1 April 2025 for companies. A holiday let is now part of the owner’s ordinary property business.
Before and after
- Capital allowances on furniture and fittings
- Profits counted as earnings for pension relief
- Full deduction of mortgage interest
- Business reliefs on sale
- Replacement of domestic items relief instead
- Profits no longer pension earnings
- 20% credit for finance costs
- Ordinary Capital Gains Tax rules
What carries on
If you had a pool of capital allowances, you can keep claiming writing-down allowances on it. New spending is dealt with under the normal property rules: replacing a sofa or a bed is relieved when you replace it, but the first set of furniture in a new let is not.
Checks for this year
- Pension contributions: are you still within the limit, now holiday let profits do not count as earnings?
- Mortgage interest: has the 20% credit changed your tax bill more than you planned?
- Ownership: holiday lets owned jointly by spouses are now usually taxed in equal shares, unless you elect otherwise.
- Business rates or council tax: the tests for being treated as a business for rates still apply.
This insight is general information, not advice for your circumstances. Talk to us before acting on it.