What is a furnished holiday let?

A Furnished Holiday Let (FHL) is a property that must meet strict HMRC rules so that it can qualify for beneficial tax treatment.

There are special tax rules for rental income from properties that qualify as furnished holiday lettings (FHLs).

If you let properties that qualify as FHLs:

• you can claim Capital Gains Tax reliefs for traders (Business Asset Rollover Relief, Entrepreneurs’ Relief, relief for gifts of business assets and relief for loans to traders)
• you’re entitled to plant and machinery capital allowances for items such as furniture, equipment and fixtures
• the profits count as earnings for pension purposes

To benefit from these rules, you need to work out the profit or loss from your FHLs separately from any other rental business.

Here we look at the basic points needed to meet FHL criteria.

• Your holiday let property needs to be located in the UK or European Economic Area (EEA). There’s no specific HMRC conditions on the type or style of property.
• The property must be let out to paying guests with the aim of making a profit. It is the intent that is most important here rather than the actual outcome.
• Your holiday home will need to be fully furnished to a good standard and ready to accept guests.
• The property must be available for letting as a furnished holiday let accommodation for at least 210 days in the year.
• You must actually let the property to paying guests for at least 105 days in the year out of the 210 days it was available.
• Generally speaking only lets of 31 days continuous duration or less qualify. If lets of more than 31 days do occur there should not be more than 155 days of this type of longer term occupation each year.

You may like to visit our Furnished Holiday Let Tax page which provides more in depth facts about the tax aspects.

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