< Back to Latest News Studies Article: 3 Primary Tax Considerations now the FHL Tax Regime has ended

Thursday 23rd October 2025

The special tax legislation for holiday let businesses, the Furnished Holiday Let (FHL) regime, was abolished from April 2025. For many, the changes will have no impact on their business and for others, there are steps that can be taken to mitigate the changes and ensure they retain as much of their profits as possible.

Zeal Tax are planning to run a webinar shortly after the Autumn Budget which will cover any changes announced that may impact holiday let owners plus recap the tax changes, suggest ways to structure your business tax efficiently and provide answers to the main issues that holiday let owners have faced in 2025.

In the meantime, Zeal have provided a summary of the 3 main issues owners should be aware of and acting on now.  

Sharing Income Between Joint Owners

Under the old rules, joint owners of qualifying holiday let properties could allocate the profits, for tax purposes, to the lowest earner. Under the new rules, owners now need to declare the profits to HMRC and pay the tax due, based on the actual legal ownership. This could result in additional income tax payable.

HMRC have, however, confirmed that joint owners that are not married can still allocate the profits in the ratio they agree. For married couples or civil partners who are impacted by the new rules, a Declaration of Trust (D of T) to change the beneficial ownership of the property can mitigate the impact of the new rules.  A D of T can’t be back dated, so it’s important to put one in place as soon as possible. Speak to a suitable legal advisor about a D of T for your property.

Capital Allowances

The ability for holiday let owners to claim capital allowances tax relief was removed when the FHL regime was abolished from April 2025. The costs of replacing domestic goods (furniture & appliances) can still be claimed as a business expense. However, if you were to purchase a hot tub, lawn mower, jet washer etc or replace them after APRIL 2025, no tax relief can be claimed.

Many owners are unaware that there is an extra level of capital allowances that could be claimed on part of the original purchase price of the property or the costs incurred to refurbish, convert or build a holiday let. 

Athough April has passed and the new tax rules are now in effect, it’s not too late to claim these capital allowances – but time is of the essence! Even if expenditure was incurred years ago you could still make a claim now and unlock tens of thousands of pounds in cash and tax savings. The last opportunity for owners to claim capital allowances is in their 2024/25 tax return (or 2025 year-end for companies).

With the deadline to identify unclaimed capital allowances fast approaching, it is vital all owners check their capital allowances position before its too late. Don’t just assume your accountant would have already claimed everything for you! Contact the team at Zeal for a free capital allowances review. 

Business Rates

The implementation of council tax premiums for second homes has nudged holiday let owners into applying for their properties to be business rated where they qualify (available to holiday let for 140+ days in the previous 12 months and actually let for 70+ of those days).

Being business rated means council tax premiums don’t apply. Holiday let properties that qualify for small business rates relief also see their business rates reduced, potentially to zero. Consequently, the Valuations Office Agency (VOA) currently has a backlog of applications. The current wait time for an application to be processed is approximately 6 to 18 months! During this time, you will still need to pay council tax and any premium (though you might ask your council to pay in smaller instalments), but your application will be back dated to when you first met the above thresholds and so qualified for business rates and overpaid council tax refunded. 

If your property should be on business rates, act now!