HOLIDAY LET TAX RULES
Furnished Holiday Let (FHL) Tax
If you let out a furnished holiday home (holiday let) in the UK or elsewhere in the European Economic Area (EEA), your rental income may be treated differently for tax purposes from other rental income.
For the holiday let to qualify, the following rules must be complied with.
Tax rules for furnished holiday lettings
To make sure your property qualifies as a furnished holiday letting, it must be:
- in the UK or EEA
- furnished
- available for commercial letting to the public, as holiday accommodation, for at least 210 days a year
- commercially let as holiday accommodation for at least 105 days a year – the rent must be charged at market rate and not at cheap rates to friends and family, and
- a short term letting of no more than 31 days
NB. A property can be let for periods longer than 31 days in one stretch but none of these days will count towards the above test. This is known as ‘longer term occupation’. Where the total of all ‘longer term occupation’ is more than 155 days in the tax year, the property will not qualify as a furnished holiday letting.
Elections
If you let more than one property as an Furnished Holiday Let (FHL), and one of those properties does not meet the 105 let days condition, you can elect to apply the condition to the average rate of occupancy for all the properties you let as FHLs. Alternatively, you may make the period of grace election for the property to continue to be treated as an FHL for a maximum of 2 consecutive years if you have not met the letting criteria in a year and meet all of the following conditions:
- genuinely intended to meet the letting conditions
- have marketed the property to the same or greater level than in successful years
- met the conditions to qualify as an FHL in the previous year
