What happened to furnished holiday lettings under MTD?

Furnished holiday letting (FHL) status was abolished on 6 April 2025. Holiday let income now sits inside your general UK property income and is taxed like any other let. Making Tax Digital then applies on the same terms as for every other landlord: mandatory from 6 April 2026 if your qualifying income is over £50,000. If you ran an FHL, two things changed at once — the tax rules and the way you report them.

What changed on 6 April 2025

The FHL regime — a special set of tax rules for short-term holiday lets — was marked for abolition at Spring Budget 2024 and scrapped a year later. From 6 April 2025:

• Holiday let income is merged into general UK property income.
• The separate FHL section of the tax return is gone — 2024/25 was the last year it appeared.
• Holiday lets follow the same expense rules as long-term lets.

The old FHL rules, now historic

FHLs used to be treated as a trade rather than investment income, which brought real advantages. To qualify, a property had to be available to let for at least 105 days a year and actually let for at least 70. Qualifying landlords enjoyed:

• Full deduction of mortgage interest and other finance costs — FHLs were exempt from the Section 24 restriction.
• Capital allowances on furniture and equipment.
• Losses that could be set against other income, not just property income.
• Business asset disposal relief on a sale, cutting capital gains tax.

What applies to holiday lets now

• Mortgage interest gives a 20% tax credit, as it does for other residential lets.
• Capital allowances are out; replacement of domestic items relief is in.
• Losses can only be used against property income.
• Holiday let income counts towards the £50,000 MTD threshold as gross property income.

Honest small print: some former FHL landlords moved their holiday lets into a limited company to recover similar treatment. That brings stamp duty, mortgage and admin consequences of its own — take advice before copying them.

Record-keeping under MTD

From April 2026, if you are over the threshold, all your UK property — holiday lets included — forms one property business. That means one set of digital records, with a date, an amount and a category per transaction, and one set of quarterly updates covering everything. The old FHL-specific categories are gone; you use the standard property categories. The final declaration for 2026/27 is due by 31 January 2028.

See also: the landlord expenses guide and the full landlord MTD guide.