Filing Your First Post-FHL Tax Return: What Has Changed and What to Watch

9 min read · Updated July 2026 · General information, not tax advice

If you own a holiday let, the tax return you file for the 2025/26 tax year will be different from any you have filed before. The special treatment for furnished holiday lets ended in April 2025, the forms have changed to match, and some of the habits you picked up over years of filing are now wrong.

This matters whether you do your own return or pay someone to do it. Plenty of returns will be filed this year on autopilot, copying last year's approach. Some of those will overpay. Others will underpay and hear about it later, from HMRC.

A Quick Recap: What Changed in April 2025

For decades, a holiday let that met certain letting conditions counted as a "furnished holiday let" (FHL for short) and got treated more like a small business than a rental property. That meant three big perks: you could knock every pound of mortgage interest off your profits, you could claim tax relief on furniture and equipment you bought, and you paid less tax when you sold.

All of that ended on 6 April 2025. Your holiday let is now taxed the same way as an ordinary buy-to-let. The property itself hasn't changed, and neither has your business. The tax rules around it have. For the full picture of what went and what survived, start with our guide to the FHL abolition.

The Holiday Let Section of the Return Has Gone

Your rental income goes on a part of the tax return called the UK property pages (HMRC calls this form the SA105). That form used to have its own separate section for furnished holiday lets, where you declared holiday let income apart from any other rent you earned.

From the 2025/26 return onwards, that section no longer exists. Your holiday let income now goes in the main property section, added together with any other UK rental income you have. In HMRC's eyes you now run one single property business, whether that's one seaside cottage or a cottage plus two buy-to-let flats.

That pooling has a silver lining. Under the old rules, a loss on your buy-to-let couldn't reduce the profit on your holiday let, because they were treated as separate businesses. Now they offset each other on the same return. And if your holiday let was carrying losses forward from earlier years, those weren't wiped out in April 2025. They moved across with it, and they'll reduce future profits of the combined business.

Your Mortgage Interest Works Differently Now

This is the change that costs real money, so it's worth understanding properly.

Under the old rules, mortgage interest was an expense like any other. If you earned £30,000 from the let and paid £10,000 in interest, you were taxed on £20,000. Simple.

Now, interest doesn't reduce your profit at all. You are taxed on the full £30,000 (minus your other expenses), and then HMRC gives you back a credit worth 20% of the interest. On £10,000 of interest, that's £2,000 off your bill.

If you pay tax at the basic rate of 20%, that works out the same as before. If you pay at 40%, it doesn't. Under the old rules, £10,000 of interest saved you £4,000 in tax. Now it saves you £2,000. Same mortgage, same property, £2,000 more tax every year.

On the form itself, the interest goes in its own box for "residential property finance costs", not in with your other expenses. Put it in the wrong place and you've understated your profit, which is the kind of error HMRC's computers are built to spot. A holiday let whose expenses jumped by exactly the size of its mortgage interest is not subtle.

Furniture, Repairs and Replacements

The old rules let you claim tax relief on furniture and equipment when you bought it, even brand new. That's finished. The hot tub, the new sofas for the refurb, the dishwasher for the second kitchen: if they're first purchases made after April 2025, there's no relief on them.

What you can still claim is the cost of replacing things. Worn mattress out, new mattress in: the replacement cost is deductible. So is repairing what's already there, which has always been claimable and still is.

The practical tip is to keep your invoices and note what each purchase actually was. "New addition" and "replacement" look identical on a receipt, and only one of them saves you tax. If you claimed relief on equipment before April 2025, part of those old claims may still be working through the system too, so don't bin the old paperwork.

Couples Who Own the Let Together

Here's one that catches married couples and civil partners. Under the old rules, you could split holiday let profits however you liked. If one of you ran the bookings, did the changeovers and answered the 11pm hot tub questions, you could put most of the profit on their return, which was handy when they paid tax at a lower rate.

That flexibility is gone. Jointly owned property income is now split 50/50 between spouses by default, regardless of who does the work. You can only move away from 50/50 by actually owning the property in unequal shares and telling HMRC about it on a form called Form 17. That involves the legal ownership, not just the tax return, so it takes some setting up. Done properly, it can restore most of what the old flexibility gave you.

The Mistakes That Will Catch People Out

1. Copying last year's return. The return you filed in January 2026 covered the final year of the old rules. It is now a template for getting things wrong. Start fresh.
2. Putting interest in with expenses. The single most expensive box on the form to get wrong, in either direction.
3. Claiming relief on new purchases. First-time buys of furniture and equipment no longer qualify. Replacements do.
4. Splitting profits by who does the work. It's 50/50 for couples now unless the ownership paperwork says otherwise.
5. Forgetting the old losses. Losses from before April 2025 survived the change. Leaving them off the return is throwing money away.

Brace for January

If you're a higher-rate taxpayer with a mortgaged holiday let, your bill this January will be bigger than the same numbers produced last year. And there's a second sting. HMRC asks most self-employed and landlord taxpayers to pay part of next year's tax in advance, in two instalments they call payments on account, each based on half of this year's bill. A bigger 2025/26 bill means bigger advance payments for 2026/27, and both hit in the same January payment.

None of this improves by being discovered on 30 January. Work the numbers out now, while there's still time to do something about them: the ownership split, the business rates position, even whether a company structure makes sense for you are all still open questions in July that are closed ones at the filing deadline.