What can you do with furnished holiday let losses now the regime has gone?

In the UK, across England, Wales, Scotland and Northern Ireland, the furnished holiday lettings rules have been abolished, but the loss rules do not simply wipe historic losses away. The practical question is now which property business the old furnished holiday let loss belongs to, and whether you still have a business it can attach to.

What happens to your furnished holiday let losses now the regime has gone?

Your furnished holiday let losses convert into carried-forward UK or overseas property-business losses from 2025-26, kept in the matching UK or overseas pool, but the legislation only makes that conversion where the person still carries on a corresponding property business in 2025-26. Finance Act 2025 states that “Schedule 5 contains provision abolishing the special rules relating to the commercial letting of furnished holiday accommodation,” and the income-tax change applies from 2025-26 because “the amendments made by Part 1 have effect for the purposes of income tax in relation to the tax year 2025-26 and subsequent tax years.” For built-up furnished holiday let losses carried forward, HMRC’s property manual says: “Any losses incurred by the FHL in the current year or carried forward from previous years will be treated as losses of the ongoing UK or overseas property business going forward.” A UK FHL loss is set against UK property business income, and an overseas FHL loss is set against overseas property business income. The gap is important: Finance Act 2025 requires that “the person carries on a corresponding property business in the tax year 2025-26,” so it does not state what happens where the former FHL owner has no corresponding property business then. Abodient tracks income and expenses at property level, which is what actually determines whether a converted FHL loss still has a property business to attach to and offset against.

Can you offset furnished holiday let losses against other income?

No: an individual landlord cannot offset brought-forward furnished holiday let losses against employment income, self-employment income or general income; the converted loss can only be used against property-business profits, and that sideways route had already closed for 2011-12 onwards, rather than being newly lost on abolition. ITA 2007 s.118 limits the carry-forward deduction because “a deduction for that purpose is to be made only from profits of the business,” and HMRC’s FHL abolition guidance says that, for individuals, “the losses can be set off against other property income.” HMRC’s older FHL loss guidance also makes clear that general-income relief had already gone: “This is not available for tax years 2011-12 onwards.” Companies are different: once the former FHL loss is an ordinary UK property-business loss, CTA 2010 s.62(3) gives relief in the same accounting period, not the following year, because “the relief is given by deducting the loss from the company’s total profits of the accounting period.” HMRC’s own example is consistent with that statutory timing: “The company can set off the carried forward loss of £1,000 and the loss incurred in 2025-26 of £500 against the company’s total profit of £10,000 in 2025-26.”

Last reviewed September 2026.

Sources

• Finance Act 2025 s.25 — “Schedule 5 contains provision abolishing the special rules relating to the commercial letting of furnished holiday accommodation.” Source
• Finance Act 2025 Sch.5 para.12 — “The amendments made by Part 1 have effect for the purposes of income tax in relation to the tax year 2025-26 and subsequent tax years.” Source
• HMRC Property Income Manual PIM4175 — “Any losses incurred by the FHL in the current year or carried forward from previous years will be treated as losses of the ongoing UK or overseas property business going forward.” Source
• Finance Act 2025 Sch.5 para.16 — “the person carries on a corresponding property business in the tax year 2025-26.” Source
• ITA 2007 s.118 — “But a deduction for that purpose is to be made only from profits of the business.” Source
• HMRC Property Income Manual PIM4175 — “This means the losses can be set off against other property income for individuals.” Source
• HMRC Property Income Manual PIM4220 — “This is not available for tax years 2011-12 onwards, see PIM4130.” Source
• CTA 2010 s.62 — “The relief is given by deducting the loss from the company's total profits of the accounting period.” Source
• HMRC Property Income Manual PIM4175 — “The company can set off the carried forward loss of £1,000 and the loss incurred in 2025-26 of £500 against the company’s total profit of £10,000 in 2025-26.” Source