Furnished Holiday Letting (FHL)


What is a FHL

The accommodation must be furnished, in the UK or European Economic Area (EEA) and commercially let for certain periods. From April 2012 the minimum period it is available for rental is 210 days and it must be actually let for 105 days in a tax year.

Difference in treatment of a FHL for tax purposes.

Income tax

The income or losses are a trading activity for income tax, corporation tax and CGT purposes but after 6 April 2011 losses can only be carried forward and set off against future profits from the same FHL business. Profits count as relevant income for pension purposes. Capital Allowances may be claimed on furniture & fixtures and plant and machinery. Mileage allowance is not available, claim actual expenses.

National Insurance (NICs)

FHL profits are deemed to be investment income on which NIC’s are not payable.

Capital gains Tax (CGT)

A FHL property will usually be a business asset for CGT and may qualify for Entrepreneurs’ Relief, roll-over and gift relief. Where a gain is rolled over into another FHL and the property later loses its FHL status there is no recovery of tax relief originally granted.

Inheritance tax (IHT)

Where there are substantial additional services are provided the FHL may qualify for Business Property Relief otherwise it is deemed an investment activity.


Registration is required when VAT registration thresholds are exceeded. Foreign FHL owners may have to register immediately.


HMRC notes on FHL can be found here.

Published 10 October 2017.

Updated 30 October 2017.