The hidden tax relief every holiday let owner should know about!

In this guest authored article, Rhys Williams-Griffiths, Head of Partnerships at Eureka Capital Allowances looks at what you need to know about FHL tax regime. 

If you own a Furnished Holiday Let, there’s a valuable tax-saving opportunity you might not be aware of: Capital Allowances tax relief. This little-known but highly beneficial incentive could unlock an average of £35,000 in potential savings per property, simply by identifying eligible embedded items within your holiday let.

What are Capital Allowances?

Capital Allowances allow property owners to claim tax relief on qualifying items of capital expenditure used within a business. In the case of FHLs, this includes a wide range of items from electrical and heating systems to kitchen fittings, bathroom fixtures, alarm systems, and more.

These assets are often already present in your property when purchased or added during renovations. 

Yet, many owners and accountants are unaware they can claim tax relief on them, due to the need for specialist surveyors in most cases. 

Why furnished holiday lets qualify

FHLs are unique in that they are treated as a trading business for tax purposes, qualifying for Capital Allowances much like hotels or guesthouses. Whether the property is owned individually, through a partnership, or via a limited company, there is scope to claim.

Even better, if your property never had a claim made before, you may be entitled to significant retrospective relief, going back to when it was first brought into use as a holiday let.

The abolition of the FHL regime

As announced in the Spring Budget of 2024, the UK government officially abolished the FHL tax regime from April 2025. From that date, FHLs are now treated the same as standard residential lettings and no longer qualify for Capital Allowances on embedded fixtures and fittings.

However, if you:

• Owned and operated an FHL that met the qualifying occupancy criteria before April 2025, and

• Have never made a Capital Allowances claim

You may still be able to make a retrospective claim based on past eligibility in the 24/25 (now). HMRC allows for claims to be backdated in many cases, provided the property qualified at the time and no claim has previously been made.

How much could you still claim?

The value of a claim depends on your property’s specifics, but we regularly identify 20–30% of the original purchase price as eligible for tax relief.

That means if your holiday let cost £400,000, you could be sitting on £80,000–£120,000 in unclaimed allowances, potentially resulting in a tax saving of £16,000–£48,000, depending on your personal or corporate tax rate.

A Capital Allowances review is a legitimate, government-approved form of tax relief that many owners simply don’t know exists.

Can you still claim?

Yes! But time may be limited.

Capital Allowances claims can be made retrospectively, but the clock is ticking. Current deadlines for completing claims are:

• 2024/25 tax year for individuals and partnerships

• 2025 year-end for limited companies

If you're unsure whether you're eligible, it's worth acting now.

How Eureka can help

At Eureka Capital Allowances, we specialise in helping FHL owners unlock hidden value through retrospective claims. Our process is simple and stress-free:

• Free High-Level Reviews – We assess your eligibility and provide a free estimate of potential tax relief

• HMRC approved methodology – professionally documented reports

• Capital Allowances Trained Surveyors – Can be carried out in person or via desktop surveys are available 

• No win, no fee – No upfront costs, you only pay if we find anything

We also work directly with your accountant to ensure the claim is submitted correctly and efficiently, or you prefer, we can arrange for the submission.  

Get in touch

If you’d like to explore how much you could still claim on your Furnished Holiday Let, reach out to us at Eureka Capital Allowances quoting ‘Classic’. Our friendly team will guide you through the process and help you discover the hidden value within your property, starting with a free, no-obligation review. You can see further details here!

For further information please contact our Friendly Team; Eureka Capital Allowances