Holiday let income will no longer boost pension allowance.
Holiday let income no longer normally counts towards pension tax relief. This means owners may not be able to contribute as much to their pension with tax advantages as before.
Mortgage interest rules now match normal rentals
If there is a mortgage on the property, the landlord can no longer deduct the full mortgage interest from theirr taxable profits. Instead, they will receive a 20% tax credit, the same as other residential landlords.
Example: If mortgage interest is £2,000 a year, the landlord will receive £400 off their tax bill.
Furniture and equipment claims have changed
The rules that allowed generous tax relief for furnishings, appliances and fittings have ended. Replacement of Domestic Items Relief is still available, including for replacing worn-out sofas, fridges or freezers, and beds or mattresses.
Selling the property
Special FHL Capital Gains Tax reliefs no longer apply. Any gain from the sale of a holiday let will be taxed at the standard residential property CGT rates.
How losses are treated
Holiday let losses now form part of the owner's general property business. These losses can be carried forward and set against future rental profits.
Running costs that can still be claimed
The following deductible running costs are unchanged:
• Repairs
• Cleaning
• Utilities
• Maintenance
• Insurance
• Platform or agent fees (for example, Airbnb service fees)
What should agents encourage landlords to do?
Review how the 2025 rule changes will affect a client's rental plans and ensure that all record keeping and tax reporting reflects the new rules.
Landlords should speak to a tax adviser if they are unsure how the changes apply to them.
