Food, Drink & Hospitality Property letting UK-wide

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.

Guide summary

You must declare your holiday let income and pay tax as a standard residential letting from April 2025. Check if your property qualifies for business rates in England or Wales to pay lower taxes. Register for VAT if your taxable turnover from holiday lets exceeds £90,000.

  • Tax your holiday let as a standard residential letting from April 2025
  • Only claim 20% tax relief on mortgage interest costs
  • Stop claiming capital allowances – use Replacement of Domestic Items Relief
  • Selling a holiday let now pays standard residential CGT rates: 18% or 24%
  • Business Asset Disposal Relief is no longer available on most sales
  • Apply for business rates in England if let at least 70 days/year
  • Apply for business rates in Wales if let at least 182 days/year
  • Register for VAT if your holiday let turnover is £90,000 or more
  • Keep records of bookings and availability to prove business rates eligibility
On this page

Related guides in this sector

Tax changes from April 2025

The special FHL tax regime was abolished from 6 April 2025 by section 25 of, and Schedule 5 to, the Finance Act 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 (100% for properties with rateable value of £12,000 or less, tapering to nil at £15,000).

England requirements

Wales requirements

Wales has higher thresholds - you need more letting days to qualify:

Apply for business rates

  1. 1

    Check you meet the criteria

    Review booking records for the required availability and letting days in the past 12 months.

  2. 2

    Download the application form

    Get the self-catering property application from GOV.UK.

  3. 3

    Gather evidence

    Collect booking confirmations, platform records (Airbnb, Booking.com), and calendar showing availability.

  4. 4

    Submit to the Valuation Office Agency

    Email specialist.rating@voa.gov.uk or use the contact options at gov.uk/contact-voa to submit your completed self-catering application.

  5. 5

    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.