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What was UK Furnished Holiday Lettings (FHL)?

Updated 2026-06-12

UK Furnished Holiday Lettings (FHL) referred to a special tax status for short-term rental properties in the UK, historically governed by HM Revenue & Customs (HMRC). The UK government abolished the FHL regime effective April 6, 2025.

Prior to this, properties that met the qualifying criteria were treated as a trade, which offered a more favorable tax treatment compared to standard long-term rental properties. This change means that profits from furnished holiday lets are now taxed in the same way as other property income.

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How it works

To qualify as an FHL, a property had to be located in the UK or European Economic Area (EEA), be adequately furnished, and be let commercially with an intent to make a profit. The property had to be available for commercial letting for at least 210 days and actually be let for at least 105 of those days.

Periods of longer-term occupation (over 31 continuous days) could not exceed 155 days. Property owners were required to keep accurate records, often using software like Lodgify, to prove they met these thresholds.

Why it matters

The FHL regime was historically important because it unlocked significant tax benefits not available to standard residential landlords. These included the ability to claim capital allowances for furniture and equipment, and eligibility for certain Capital Gains Tax reliefs.

Profits from an FHL also counted as 'relevant earnings' for pension contributions. Following the regime's abolition in 2025, these specific advantages are no longer available, and owners must account for their income and expenses differently.

Examples

  • A host in Scotland had a property that was let for 100 days. They owned a second qualifying FHL in Wales that was let for 110 days, which allowed them to use the 'averaging election' to meet the 105-day threshold for both properties.
  • A cottage owner in the Cotswolds ensured their property was available for booking 250 days a year and achieved 120 days of actual lets, successfully qualifying for FHL status.
  • An investor purchased a seaside apartment and spent £10,000 on new furniture. Because the property qualified as an FHL, they could claim this cost as a capital allowance to reduce their taxable profit.
  • After several years, an FHL owner sold their property. Due to its qualifying status, they were able to claim Business Asset Disposal Relief, which could significantly reduce their Capital Gains Tax liability.

Official resources and references

Frequently asked questions

What were the main occupancy conditions for a property to qualify as an FHL?+
To qualify as a Furnished Holiday Letting, a property had to meet three conditions: the availability condition (available to let for at least 210 days a year), the letting condition (actually let for 105 days a year), and the pattern of occupation condition (not having more than 155 days of longer-term lets).
What happened if a property didn't meet the 105-day letting condition under the old rules?+
HMRC allowed for flexibility. An owner could make an 'averaging election' if they owned multiple FHLs and the average letting days met the threshold. There was also a 'period of grace election' if there was a genuine intention to meet the threshold, allowing the property to still qualify for up to two consecutive years.
How were FHL profits treated for pension and National Insurance purposes?+
Profits from an FHL were considered 'net relevant earnings' for pension contributions, a significant tax advantage. However, the income was generally not subject to Class 2 or Class 4 National Insurance Contributions. The pension benefit was lost with the abolition of the FHL regime in 2025.
Is a holiday let still subject to Business Rates instead of Council Tax?+
Yes, this aspect remains largely unchanged. If your self-catering property in England is available to let for 140 days or more a year, it will generally be rated for Business Rates rather than Council Tax. Different rules and thresholds apply in Scotland and Wales, so it is important to check with the local council.
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