Over the past few years, there have been many changes to tax relief on interest payments for buy-to-let properties. This has resulted in landlords and property investors looking for more tax-efficient ways to manage their property investments.

Recently there has been an increase in properties being offered as furnished holiday lets. This works well if your property is in an area with high demand for holiday accommodation.

There is a lot of information on the Gov.UK website, which was recently updated to help you if you decide to go down this route – Guidance HS253 Furnished Holiday Lettings (2022). We have reviewed this and summarised some key points to help you learn more about how this will work.

The first step is to check whether your property qualifies as a furnished holiday let (FHL). Your property must be:

• In the UK or in the European Economic Area (EEA) – the EEA includes Iceland, Liechtenstein and Norway.
• Furnished – there must be sufficient furniture provided for normal occupation, and your visitors must be entitled to use the furniture.

The property must be commercially let, and you must intend to make a profit.

Several occupancy conditions must be met before you qualify as well; these are:

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.
2. The availability condition - Your property must be available for letting as furnished holiday accommodation letting for at least 210 days in the year.
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.

If your property does qualify, then there are some tax benefits as shown below:

• You can claim Capital Gains Tax reliefs for traders (Business Asset Rollover 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

If you would like to find out more about furnished holiday lets and discuss whether this approach would be more tax efficient, please contact us by calling 01623 490 120 or email This email address is being protected from spambots. You need JavaScript enabled to view it..