What owners lost
- Full deduction of mortgage interest, now replaced by the basic-rate credit.
- Capital allowances on furniture and equipment for new spending. Existing pools can generally continue to be written down.
- Business Asset Disposal Relief and other business CGT reliefs.
- Treating profits as relevant earnings for pension contributions.
How holiday lets are taxed now
Profit goes into your ordinary property business with any other lettings. Losses can be set only against future property profits. Replacement of domestic items relief applies to like-for-like replacements.
The 2027 angle
From 6 April 2027, holiday let profit is taxed at the new property rates, and the finance cost credit rises to 24%. Business rates and council tax rules for holiday lets are separate and set locally or nationally. Check with your council.
Frequently asked questions
Can I still claim capital allowances on my holiday let?
Not on new expenditure after the regime ended, but existing pools can generally continue. Replacements usually qualify for replacement of domestic items relief instead.
Sources
- GOV.UK: Furnished holiday lettings tax regime abolition
- GOV.UK: Tax relief for residential landlords, how it's worked out
- HM Treasury: Budget documents, 28 October 2026
Sources last checked 9 November 2026. See all our sources and how we keep pages up to date.
This guide explains general rules for individual landlords in England, Wales and Northern Ireland. It isn't personal tax advice. Check GOV.UK or speak to a qualified adviser before you act.