Landlord | Plymouth
Holiday Lets Around Plymouth After the FHL Regime: What Changed and What to Do Now
From Plymouth's waterfront apartments to cottages on the Tamar and across into Cornwall, the South West holiday-let economy is enormous, and its tax world changed fundamentally when the furnished holiday lettings regime was abolished from April 2025. Owners who built plans around the old rules need a new map.
What disappeared with FHL status
- Full mortgage interest deduction: holiday lets now sit under the same Section 24 regime as ordinary residential lets, with the 20 per cent interest credit.
- Capital allowances on furnishings and equipment for new expenditure: replaced by the same replacement-of-items relief other landlords use.
- The pension-earnings status of FHL profits and the CGT business reliefs (rollover, gift relief, business asset disposal) for most future disposals.
What did not change
The income remains taxable property income with full deduction of running costs: cleaning and changeover teams, platform commissions, utilities, insurance, repairs, and replacement furnishings like-for-like. VAT thresholds still matter for large operations, and council tax versus business rates still depends on availability and actual letting levels under local rules.
Decision worth making this year: whether the let still works as a holiday operation, converts to a longer-term tenancy, or sells. Each route has a different tax path now, and the right answer depends on occupancy, leverage and your exit horizon, not nostalgia for the old regime.
The Hoe-view apartment, re-planned
An owner letting a two-bed near the Hoe through the platforms had budgeted around FHL capital allowances and full interest relief. Re-running the numbers post-abolition, the operation still cleared a sensible profit after the 20 per cent interest credit, but the planned second purchase did not; she redirected to paying down the first mortgage instead, saving more after tax than the new flat would have earned.
Local service: landlord accountant in Plymouth. Related: CGT on property.
Frequently Asked Questions
Do I still split the year between holiday and longer lets on the return?
All of it is now ordinary property income on the same pages; the old FHL separation is gone for current years.
Are platform commissions still fully deductible?
Yes, commissions, cleaning, linen, changeovers, listing photography and the rest of the running costs remain normal deductions.
What happens to capital allowances I claimed before abolition?
Historic claims stand; transition rules deal with pools at the changeover. New furniture now uses replacement relief instead. We handle the transition figures on the return.
Is business rates still available instead of council tax?
That is a local-rating question (availability and actual let days under current rules) separate from the income tax change; many genuine holiday lets still qualify. The bill you pay is deductible either way.
Does the 60-day CGT rule apply when I sell the cottage?
Yes, it is a residential property: report and pay within 60 days of completion, with the gain computed under normal residential CGT now that business reliefs have largely gone.
I co-own with my sister. Anything special now?
Joint owners declare their shares as with any property income. The flexible profit-splitting some FHL owners used has gone with the regime.
Is incorporating the holiday-let business worth it now?
Occasionally, for larger leveraged operations; the company keeps full interest deduction but adds extraction and admin costs. It is a numbers decision we model case by case.
VAT worries me as bookings grow. When does it bite?
Holiday accommodation is VATable once your taxable turnover crosses the registration threshold, unlike ordinary residential rent. Growing multi-property operations should watch this line carefully; we monitor it for clients.
Running a holiday let in the South West?
Free 15-minute call: post-FHL numbers, keep-convert-or-sell modelling, and a clean return for the new rules.
Or email info@yourtaxhelp.co.uk | Landlord accountant in Plymouth
General guidance only. Not personal tax advice. Contact us for advice specific to your situation. Figures relate to the 2025/26 tax year unless otherwise stated.