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Furnished Holiday Lets

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 are entitled to capital allowances for items such as furniture, equipment, and fixtures.

The furnished holiday let regime is due to be abolished in April 2025. Learn more about the HMRC announcement.

Furnished Holiday Lets in Wales

Last year there was a rule change by the Welsh Government that has caused some confusion with regard to the renting out of FHLs in Wales. From 1 April 2023 the occupancy rules for the purposes of calculating business rates changed. Under the new rules FHL owners are required to pay council tax unless the property is let out for a minimum of 182 days a year, and available to be let out for a minimum of 252 days a year. However, the rule change does not apply to the occupancy conditions for the purpose of claiming capital allowances, which remain (until 6 April 2025) as a minimum of 105 days letting and 210 days availability. It was announced in the last budget that concessions for all FHLs will be abolished on 6 April 2025. After this date no new claims for capital allowances can be made, however, existing allowances can continue to be claimed after that date until all used up.

The 3 Occupancy Conditions

Accommodation can only qualify as an FHL if it passes all 3 occupancy conditions which we have highlighted below.

The Occupancy Conditions

1. The Pattern of Occupation Condition

If the total of all lettings that exceed 31 continuous days is more than 155 days during the year, this condition is not met so your property will not be an FHL for that year. The 31 day rule can be extended if something unforeseen happens, for example, if as an occupant being unable to leave on time due to an accident, or if a holiday has to be extended due to the occupant not being able to fly as scheduled.
2. The Availability Condition

Your property must be available for letting as furnished holiday accommodation for at least 210 days in the year (140 days for the tax year 2011 to 2012 and earlier). Do not count any days when you are staying in the property. HMRC do not consider the property to be available for letting while you are staying there.
3. The Letting Condition

You must let the property commercially as furnished holiday accommodation to the public for at least 105 days in the year (70 days for the tax year 2011 to 2012 and earlier). It does not count as a commercial let if the property is occupied by family or friends at no charge.

Accommodation that qualifies as a Furnished Holiday Let

To qualify as an FHL your property must be:

In the UK or in the European Economic Area (EEA)

which includes Iceland, Liechtenstein and Noway.

Furnished

there must be sufficient furniture provided for normal occupation and your visitors must be entitled to use the furniture

How to use the occupancy conditions:

For a Continuing Let
For a New Let
When your Letting Stops

For a Continuing Let

Apply the tests to the tax year – that is from 6 April one year to the 5 April the next.
For a New Let

Apply the tests to the first 12 months from when the letting began.
When your Letting Stops

Apply the tests to the 12 months up to when the letting finished