Capital allowances for holiday lets
The furnished holiday let regime has been abolished, but existing pools carry on and serviced accommodation run as a trade can still qualify. Check your position before it costs you.
ImportantThe furnished holiday let regime ended on 6 April 2025 (1 April 2025 for companies). New allowances are only available where the property is run as a trade, such as serviced apartments or a B&B. Speak to us before relying on this estimate.
Until April 2025, a furnished holiday let available for at least 210 days and let for at least 105 days a year was treated like a business, and owners could claim embedded capital allowances on kitchens, bathrooms, heating and flooring. Typically we found around 25% of the purchase price: £125,000 of allowances in a £500,000 property, worth £50,000 to a higher-rate taxpayer.
The regime was abolished from 6 April 2025 for income tax and 1 April 2025 for corporation tax. Former FHLs are now taxed as ordinary residential lettings, and the dwelling-house restriction blocks new plant and machinery claims.
That does not mean the opportunity has gone. If you already have a capital allowances pool, you keep writing it down with no balancing charge. And accommodation run as a genuine trade, such as serviced apartments with hotel-style services, B&Bs and glamping or holiday parks with communal facilities, can still qualify. We review the facts property by property.
What qualifies
Legislation that matters
The special furnished holiday let rules ended from 6 April 2025 (income tax) and 1 April 2025 (corporation tax). Existing pools continue to be written down; new expenditure in a residential let does not attract plant and machinery allowances.
Plant in a dwelling-house let as part of a property business does not qualify. Communal areas outside the individual dwellings, and properties run as a trade rather than let, are treated differently.
Where the owner provides substantial services, such as daily cleaning, meals and reception, the activity can be a trade. The answer decides whether allowances, business rates and other reliefs apply, so the facts need setting out properly.
Recent holiday lets claims
The UK’s leading capital allowance specialists
Embedded allowances need a property survey, a valuation and specialist tax knowledge. Most accountancy firms claim invoiced items such as furniture and computers, but don’t have the surveying resource to identify fixtures built into the fabric of a building.
Allowances are not deducted from the cost of the asset when calculating a gain (s41 TCGA 1992), so a claim cannot create or increase a chargeable gain. They can restrict a capital loss, and on a sale the s198 election decides what passes to the buyer, so plan it into the transaction.
Every claim is documented to stand up to scrutiny, and we support you throughout any HMRC enquiry. To date every report we have submitted has been approved.
No. If we can’t identify previously unclaimed allowances, there is no fee. Full fee terms are set out in our engagement letter.
Two minutes, no obligation, and no fee if we can’t identify previously unclaimed allowances.
