Furnished Holiday Lettings

To qualify as a furnished holiday letting, and therefore benefit from certain tax breaks, there are a number of conditions to be met.

Firstly, the business must be carried on commercially.

Commercially’ means let on a commercial basis and with a view to making a profit. Close season lettings may produce no profit but normally help towards the cost of maintaining the property.  This letting can still be treated as commercial. On the other hand, lettings to friends or relatives at zero or nominal rents are not commercial.

If your property meets this main criteria you also need to pass the qualifying tests:

  • Availability. The property must be available for commercial letting as holiday accommodation to the public for at least 210 days during the relevant period;
  • Letting. The property must be commercially let as holiday accommodation to members of the public for at least 105 days during the relevant period. A letting to the same person for longer than 31 continuous days (a period of longer term occupation) is not a letting as holiday accommodation for the purposes of this condition; and total periods of longer term occupation must not exceed 155 days during the relevant period.

If you have a property that reaches the occupancy threshold in some years but not in others you could use a ‘period of grace’ election to help you to reach the threshold.

If you have multiple properties (say a small complex) and only some properties qualify in some years there is an averaging election available.

If a property continues to fail to meet the criteria after two years of being deemed treated as qualifying then that property is no longer an FHL property.

If lettings are cancelled due to unforeseen circumstances, for example, because of extreme adverse weather conditions t is likely you would be able to say that there had been a genuine intention to let.

If you have more than one FHL property, sometimes both averaging and period of grace elections may be used to ensure a property continues to qualify.


Holiday lettings that meet the relevant conditions can be treated as a trade for the following purposes:

  • Entitlement to plant and machinery capital allowances on furniture, white goods etc in the let property as well as on plant and machinery used outside the property (such as vans and tools). There are no capital allowances for the cost of the property itself or the land on which it stands
  • Certain capital gains reliefs (including business asset roll-over relief, Entrepreneurs’ Relief, relief for gifts of business assets, relief for loans to traders)
  • Profits count as relevant UK earnings when calculating the maximum relief due for an individual’s pension contributions
  • Losses from an FHL business may only be carried forward against future profits from the same business
  • There is no restriction on the deductibility of mortgage interest incurred in relation to the FHL business

Next steps

To discuss your FHL property options in more detail please get in touch.


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