The furnished holiday letting rules are gone

What the regime used to give you

For decades, a property that met the FHL tests — available 210 days, let 105, no long-term occupation — was treated much more like a trade than a rental. Four things followed, and all four have gone:

• Full relief on mortgage interest. FHLs were outside the section 24 restriction that has applied to ordinary landlords since 2017. Interest came off profit in full. Now it does not: relief is a basic-rate 20 % tax credit, like any other rental. For a higher-rate taxpayer with a mortgage, this alone is the whole story.
• Capital gains reliefs on sale. Business Asset Disposal Relief and rollover relief are no longer available on a former FHL. The residential property CGT rate applies instead.
• Capital allowances on furniture and equipment. New expenditure now falls under replacement of domestic items relief rather than capital allowances, which is a narrower thing.
• Pension headroom. FHL profits counted as relevant earnings for pension contributions. They no longer do.

What the transitional rules keep

Not everything vanished on the day. Existing capital allowance pools continue to attract writing-down allowances, and losses that had accumulated in an FHL business can be carried forward and set against future profits of your wider UK or overseas property business. An anti-forestalling rule was included to stop contrived disposals timed to catch the old CGT treatment.

Your accountant will know which of these applies to your particular history. This is exactly the kind of change where a generic answer is worthless.

Why this ends up being an argument about commission

Here is the uncomfortable arithmetic. If your after-tax position dropped, you have three levers: charge more, spend less, or lose less of what the guest already pays.

Raising the nightly rate is the hardest of the three, because your rate is set by the market and by whatever the identical cottage two doors down is charging. Cutting cost has a floor: cleaning, laundry and maintenance are the product.

The third lever is the one that changed least in the last decade and gets the least attention. A booking that arrives through a portal at 15 % commission and the same booking taken on your own site are the same guest, the same nights and the same cleaning — with a materially different amount left over. On a £1,200 week, that gap is roughly the entire increase in tax that many owners absorbed in 2025.

That is not a reason to leave the portals. They bring guests who have never heard of you. It is a reason to stop paying commission on the guests who have — the ones who stayed before, the ones who were recommended, the ones who type your cottage’s name into Google.

Not tax advice, and deliberately a summary: the transitional rules are detailed and depend on your own history of allowances and losses. Speak to an accountant who has handled a holiday let through the transition.