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Using former FHL losses

From 6 April 2025, furnished holiday lets are treated in the same way as other lets for tax purposes. Landlords letting both holiday accommodation and other properties (whether residential or commercial) calculate the profit for their property business as a whole, taking into account the income and expenses from all properties. It is only the total income and total expenses that are relevant – there is no need to calculate the profit and loss for each property or each type of property separately for tax purposes (although the landlord may wish to do so in order to monitor the performance of each property).

As the profits are calculated at business level rather than property level, if one property makes a loss, this is automatically offset against profits made on other properties. However, if the property business as a whole makes a loss, that loss can be carried forward and offset against future profits of the same property business.

Losses made in 2024/25 and earlier tax years

For 2024/25 and earlier tax years, different rules applied to properties which were classified as furnished holiday lettings for tax purposes. The profits for furnished holiday lettings were calculated separately from other lettings, and where a loss was made on the furnished holiday lets, the loss could only be carried forward and set against future profits from furnished holiday lettings; the loss could not be set against profits from other lettings. Likewise, if a landlord made a loss on other lettings, the loss could not be set against any profits from furnished holiday lets.

This has all changed. From 6 April 2025 onwards, all properties owned by a landlord in the same capacity go into the same pot. Losses bought forward, regardless of their origin, can be set against profits from the amalgamated property business.

Example

A landlord lets two residential properties, a commercial property and two holiday lets. For 2024/25 and earlier tax years, the profit or loss on the holiday lets was calculated separately from that on the other properties. On 6 April 2025, the furnished holiday lets had unrelieved losses of £10,000.

From 6 April 2025, all five properties are treated in the same way and the profit or loss is calculated for the property business as a whole. For 2025/26, the property business makes a profit of £32,000. The unrelieved losses of £10,000 brought forward from the furnished holiday lets can be set against the profit, reducing the taxable profit for 2025/26 to £22,000.

12/08/2025