Running a furnished holiday let after 6 April 2025 still lets you deduct the same day-to-day costs you always could, but the list of furnished holiday let tax deductible expenses now sits inside the ordinary UK property business rules rather than the old FHL regime. Utilities, cleaning, insurance, letting fees, repairs, and consumables come off your rental income in full. Replacing furniture and appliances is covered by a specific relief. Mortgage interest is the exception: it no longer reduces your profit at all, and you get a 20% basic-rate tax credit in its place.
Running Costs You Can Still Deduct in Full
The abolition of FHL status did not touch revenue expenses. Anything incurred wholly and exclusively for the property business remains deductible under Section 34 of the Income Tax (Trading and Other Income) Act 2005.1legislation.gov.uk. Income Tax (Trading and Other Income) Act 2005, Section 34 – Expenses Not Wholly and Exclusively for Trade and Unconnected Losses HMRC’s guidance sets out the main categories:2GOV.UK. Work Out Your Rental Income When You Let Property
- Repairs and maintenance that restore the property rather than improve it: fixing a broken boiler, replacing roof tiles after storm damage, repainting between seasons, treating damp or rot.
- Utilities: water rates, gas, electricity, and either council tax or business rates for the property.
- Insurance: buildings, contents, and public liability. Life insurance tied to a mortgage does not qualify.
- Letting and management fees: commissions paid to booking platforms, property management charges, and letting agent fees.
- Cleaning and laundry: turnover cleans between guests, linen services, and wages of cleaners or gardeners you employ directly.
- Advertising: listing fees, professional photography, and direct marketing for the property.
- Professional fees: accountancy costs for the rental accounts and legal fees for leases of a year or less.
- Consumables: toiletries, cleaning products, welcome hamper items, and other supplies provided to guests.
One reporting point catches people out. If a management agent takes bookings and pays you net of their commission, report the gross rent as income and claim the commission separately as an expense. HMRC expects to see the full rental figure, not what landed in your bank account.
Fixtures built into the property, such as boilers, radiators, and fitted bathroom suites, are not “domestic items” for the separate relief covered below. Replacing them is normally a repair, and the cost is deductible in full provided the replacement is broadly like-for-like rather than a meaningful upgrade.
Replacing Furniture, Appliances, and Soft Furnishings
Capital allowances on new furnishings are no longer available for FHLs. The route now is Replacement of Domestic Items Relief under Section 311A of ITTOIA 2005, which gives a deduction when you swap an old item for a new one.3legislation.gov.uk. Income Tax (Trading and Other Income) Act 2005, Section 311A – Replacement Domestic Items Relief It covers four groups of items:4GOV.UK. PIM3210 – Furnished Lettings: Replacement of Domestic Items Relief
- Movable furniture: sofas, beds, dining tables, wardrobes, chairs.
- Furnishings: curtains, rugs, carpets, bed linen.
- Household appliances: fridges, freezers, washing machines, televisions, dishwashers.
- Kitchenware: crockery, cutlery, pots, utensils.
The relief is for replacements only. Furnishing a property for the first time gives no deduction. If the new item is broadly the same quality as the old one, deduct the full cost. If you upgrade, you can only deduct what an equivalent-quality replacement would have cost. Anything you get for the old item on sale or trade-in reduces your deduction.4GOV.UK. PIM3210 – Furnished Lettings: Replacement of Domestic Items Relief
If you already had expenditure sitting in a capital allowances pool before 6 April 2025, that pool does not have to be written off immediately. Writing down allowances, balancing allowances, and balancing charges on that pooled expenditure continue after April 2025 until the pool is exhausted.5GOV.UK. Clarification on Abolition of the Furnished Holiday Lettings Tax Regime Only new expenditure added after the regime ended is blocked from capital allowances.
Mortgage Interest and Other Finance Costs
This is the change that costs higher-rate taxpayers real money. Before April 2025, FHL owners deducted mortgage interest in full from rental profits. From 2025/26 onwards, finance costs no longer reduce your rental profit at all. You receive a 20% basic-rate tax credit against your income tax bill instead.5GOV.UK. Clarification on Abolition of the Furnished Holiday Lettings Tax Regime
On £12,000 of annual mortgage interest, a higher-rate taxpayer’s relief drops from £4,800 (40% deduction) to £2,400 (20% credit). A basic-rate taxpayer sees no change in cash terms, but the mechanism is different. There is a further sting. Because interest no longer reduces the profit figure, your reported rental income is higher, which can push you into a higher tax band or trigger loss of personal allowance around the £100,000 threshold.
The same restriction applies to loan interest for equipment purchases, mortgage arrangement fees, and broker fees. Treat these as finance costs for the tax credit, not as ordinary deductions.
Apportioning Expenses When You Use the Property Yourself
If you stay in the property, you cannot claim a full year of expenses. Section 34(2) of ITTOIA 2005 allows a deduction for any identifiable proportion of an expense that is genuinely for business purposes, but the personal-use share must come out.1legislation.gov.uk. Income Tax (Trading and Other Income) Act 2005, Section 34 – Expenses Not Wholly and Exclusively for Trade and Unconnected Losses The usual method is time-based: split the year into days of commercial letting, days of personal use, and days the property sat empty while being marketed.
Vacant days count as business days, not personal days, provided the property is genuinely available and being marketed. HMRC’s own guidance confirms that where a property is kept solely for holiday letting but is closed because there are no bookings, full expenses are allowed for that period as long as there is no private use.6HM Revenue & Customs. PIM4115 – Furnished Holiday Lettings: Calculating Profits and Losses So a property let commercially for 126 nights, vacant for 225 nights, and used personally for 14 nights would have expenses reduced by 14/365, or roughly 4%.
Keep a clear log of every night the property is occupied and by whom. That record is your first line of defence if HMRC queries the split.
Losses: What You Can No Longer Do
Sideways loss relief is gone. Under the old regime, FHL losses could be set against employment income, self-employment profits, or dividends in the same tax year. From 2025/26 onwards, any loss from your holiday let is treated as a loss of your UK property business and can only be carried forward against future property income.5GOV.UK. Clarification on Abolition of the Furnished Holiday Lettings Tax Regime
Losses brought forward from earlier FHL years follow the same rule. They carry forward within the property business and do not expire, but they cannot be offset against employment or other non-property income on your 2025/26 return. If your holiday let regularly runs at a loss, that loss now sits unused until the property or your wider property portfolio turns a profit.
Reporting and Record-Keeping
Holiday let income goes on the SA105 supplementary pages of your Self Assessment return.7GOV.UK. Self Assessment: UK Property (SA105) For 2025/26 onwards, FHL income no longer has its own section; it forms part of your general UK property business, and the SA105 notes for 2025/26 reflect that.8HM Revenue & Customs. UK Property Notes
Deduct allowable expenses from gross rent to reach your profit, then apply the 20% finance cost credit separately. The online filing deadline is 31 January after the end of the tax year, so 2025/26 income must be reported by 31 January 2027.9GOV.UK. Self Assessment Tax Returns: Deadlines
Keep every receipt, invoice, and bank statement supporting your expense claims. Property-related capital records, such as purchase receipts for furniture, invoices for building work, and any capital allowance calculations, should be held until you dispose of the property, because they establish the cost base for a future capital gains calculation. With Making Tax Digital now applying to many landlords, digital filing habits are worth building early.