Making Tax Digital · Landlords
Holiday lets and standard buy-to-let: the tax rules after FHL abolition
ONLY£15A MONTHThe former furnished holiday lettings tax regime no longer applies to Income Tax years beginning on or after 6 April 2025.
The former furnished holiday lettings tax regime no longer applies to Income Tax years beginning on or after 6 April 2025. A short letting period or an Airbnb listing does not restore those former advantages. Landlords need to review the current property rules and any transitional balances.
Start with the tax year
HMRC's Property Income Manual confirms the end of the FHL regime. Older examples about FHL losses and reliefs may describe the previous regime, so read their dates before applying them to 2026/27.
Residential finance-cost restrictions and ordinary property expense principles now matter for former FHL activities within their scope. Initial furniture purchases and replacement domestic items need distinguishing. Existing capital-allowance pools and losses require review under the transition rules rather than being discarded or recreated.
Short stays still create distinctive records
Track gross booking income, platform commissions, cleaning charges, refunds and amounts collected for others. Keep private-use periods and costs identifiable. A platform's payout may combine several stays and deduct fees before reaching your bank.
The tax classification depends on the actual activity. Exceptionally, substantial services can raise different questions; do not decide that every short-term let is automatically a trade.
Worked example: a net booking settlement
A landlord's statement shows £2,400 of gross accommodation income and £360 of platform charges, leaving £2,040 paid to the bank. Subject to the actual agreement, the records show the gross income and separate eligible fee.
A £700 replacement appliance and a £700 appliance bought to furnish a newly acquired property require different analysis. Equal price does not mean equal relief.
Keep the property business and the property detail clear
UK rental properties are generally brought together in one UK property business for Income Tax. Foreign property belongs in a separate business. A property reference remains useful for management and evidence, even though a separate quarterly submission is not normally required for every UK address.
HMRC's rental-income guidance explains the basic income and expense rules. For joint ownership, establish the share taxable on you before allocating receipts and expenses. The person whose account receives the money is not necessarily the person taxable on all of it.
Keep revenue costs, capital projects and residential finance costs identifiable. A mortgage payment can include a capital repayment and interest. Neither should be treated as an ordinary repair merely because it appears among the property's monthly outgoings.
For shared bills, use a reasonable allocation and retain the calculation. Do not claim the full same expense against several properties or owners. A property-level schedule should add back to the business totals and to the supporting statements. Those connections make it easier to answer a question about one address without losing sight of the portfolio as a whole.
Keep the evidence connected to the figures
Your digital record should explain the amount, date and nature of the transaction. Keep the invoice, receipt, statement or other evidence that supports it. A photograph can make a paper document easier to retain, but a folder of photographs alone does not create complete transaction records.
For sole traders, HMRC normally requires business records to be kept for at least five years after the relevant 31 January filing deadline. Keep them longer where the rules for a late return, enquiry or other circumstances require it. Check the record-retention guidance.
Make the records usable by your future self. Include a short explanation where a bank description is vague, retain the calculation behind a business-use split and make corrections traceable. For a missing receipt, try the supplier account, email confirmation or a replacement invoice before relying on incomplete evidence.
At review time, compare your records with the bank or payment account and investigate differences. Equal totals are useful, but two errors can cancel each other out. A sample of individual transactions can reveal a duplicated purchase or an omitted customer receipt that a totals-only check misses.
Where this fits into Making Tax Digital
For 2026/27, the first mandatory phase generally covers individuals whose combined qualifying self-employment and property income was more than £50,000 in 2024/25, subject to exemptions. Qualifying income normally means income before expenses. It is a different figure from taxable profit. Check the qualifying-income rules.
Once within MTD, keep the required digital records and send quarterly summaries for each relevant business. The summaries are cumulative from the start of the reporting year. They do not contain your entire personal tax position, and sending one does not itself create a quarterly tax-payment demand.
HMRC does not require accounting or tax adjustments before each quarterly update. Those adjustments and the other information needed for the annual return still have to be completed at the appropriate stage. Keep a review list so a matter deferred until year end is not forgotten. Read HMRC's quarterly-update guidance.
Software can organise the information, but the business facts remain essential. Review the figures you approve rather than assuming that a successful import has also settled every tax question.
Review the transition once, then maintain the routine
Keep the final pre-abolition tax calculations, loss records and asset schedules. Agree how those balances carry into the current rules. Use property references to track booking income and costs without assuming a separate MTD update for each UK holiday property.
Take the next step
Avona.app offers a self-service route from £15/month. Bring your records together, review the figures and choose a workflow that fits your business. For professional help, discuss the scope and total price of Avona Concierge, managed by chartered accountants, before choosing a service.