Guide
Holiday let tax obligations and business rates
Tax obligations and business rates for self-catering holiday accommodation from April 2025. Covers the FHL regime abolition, capital gains tax on sale, business rates eligibility in England and Wales, and VAT on holiday accommodation.
Tax changes from April 2025
The special FHL tax regime was abolished from 6 April 2025. Your holiday let is now taxed the same as other residential lettings.
What this means for you
- Mortgage interest: If you're a higher rate taxpayer, only 20% tax relief (not full deduction)
- Furniture: No capital allowances - only Replacement of Domestic Items Relief for like-for-like replacements
- Pension contributions: Letting income doesn't count as 'relevant earnings'
- Selling: Standard residential CGT rates, no Business Asset Disposal Relief
Historical FHL conditions (for reference)
These conditions applied until 5 April 2025. You may need them for previous tax years or transition claims:
Capital Gains Tax on sale
When you sell, you'll pay standard residential property CGT rates:
If your FHL business ceased before 6 April 2025 and you dispose of the property within 3 years, you may still qualify for Business Asset Disposal Relief:
Business rates
Business rates eligibility is separate from the FHL tax regime - the rules haven't changed. Properties meeting availability and letting tests pay business rates instead of council tax.
This matters because you may get Small Business Rate Relief (up to 100% for properties with rateable value under £15,000).
England requirements
Wales requirements
Wales has higher thresholds - you need more letting days to qualify:
Apply for business rates
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Check you meet the criteria
Review booking records for the required availability and letting days in the past 12 months.
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Download the application form
Get the self-catering property application from GOV.UK.
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Gather evidence
Collect booking confirmations, platform records (Airbnb, Booking.com), and calendar showing availability.
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Submit to the Valuation Office Agency
Email selfcatering@voa.gov.uk with subject 'Self-catering application - England' or post to Wycliffe House, Green Lane, Durham DH1 3UW.
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Confirm annually
You must confirm each year that you still meet the requirements.
VAT on holiday accommodation
Holiday accommodation is standard-rated for VAT (20%). Register if your taxable turnover exceeds the threshold:
Overseas owners: If you're VAT-registered overseas and receive UK rental income, register for UK VAT immediately - there's no threshold for overseas owners.