Holiday Let Tax and Business Rates 2026/27: UK Host Guide

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Overview

The 2025/26 tax year is the first full year in which holiday lets have been taxed like any other rental property. The tax return for it is due on 31 January 2027, business rates were revalued on 1 April 2026, and Making Tax Digital for Income Tax switched on for the largest landlords in April. If you let a cottage, a lodge, a static caravan or a house to working crews, all three changes reach your numbers this winter.

This guide sets out what changed, what stayed the same and the dates worth putting in the diary. It is general information, not tax advice: the right answer for your property depends on your ownership structure, your other income and where in the UK the property sits, so check the detail with an accountant before acting on it.

What ended with the furnished holiday lettings regime

Until April 2025, a holiday let that passed the furnished holiday lettings (FHL) tests was taxed more like a trading business than a buy-to-let. HMRC's clarification note confirms that FHL status "only applies to the tax year 2024 to 2025, or to 31 March 2025 for companies" (GOV.UK). From 6 April 2025 for individuals and 1 April 2025 for companies, former FHLs fall into the ordinary property business rules.

Business rates or council tax: the 140 and 70-night test

Tax and rates are separate systems. Losing FHL status for income tax does not move a property out of business rates, and the rates test has its own rules that differ across the UK.

Nation	Available to let	Actually let	Source
England	140 nights or more	70 nights or more in the previous 12 months	East Hampshire District Council
Wales	252 days or more	182 days or more	Letting Agent Today
Scotland	140 nights or more in the financial year	70 nights or more in the financial year	mygov.scot

In England the 70-night letting test has applied to assessments since 1 April 2023, and the Valuation Office Agency asks owners for evidence. In Scotland the owner has to prove each year that the property met the criteria, usually by 26 May after the 31 March year end, using the self-catering declaration on the Scottish Assessors Association website. Miss that and the property stays on the council tax list for the year.

Two practical points for hosts who mix holidays with working crews:

The test counts short lets. The rules refer to letting for "short periods", and nights used by family and friends free or at a reduced rate do not count. If a large part of your year is a single long contractor booking, check with the Valuation Office Agency or your assessor how those nights will be treated before you rely on them.

Keep the evidence as you go. A simple spreadsheet of booking dates, nights and amounts paid, plus screenshots of listings showing availability, makes the annual return a ten-minute job.

What the bill looks like after the 2026 revaluation

New rateable values took effect in England on 1 April 2026. Small Business Rate Relief gives 100% relief where the rateable value is £12,000 or less, tapering to nothing between £12,001 and £15,000. Above that, the bill is the rateable value multiplied by the year's multiplier. For 2026/27 the small business multiplier for retail, hospitality and leisure is 38.2p and the general small business multiplier is 43.2p, both for rateable values below £51,000, with a 1p transitional supplement for one year (Wirral Council). Your council's rates team can confirm which multiplier applies to your property.

Owners with more than one let should ask the council how adding another unit affects relief before buying.

Frequently asked questions

Do holiday lets still get any special tax treatment in 2026?+

Not for income tax or capital gains tax. Since 6 April 2025 for individuals and 1 April 2025 for companies, holiday lets are taxed under the same property business rules as long-term lets. Business rates are separate and still treat qualifying self-catering properties differently from homes.

Can I still claim mortgage interest on a holiday let?+

Individual owners get relief as a basic-rate tax credit of 20% of the finance costs, rather than deducting the interest in full. Companies are not subject to the restriction.

What happens to capital allowances I claimed before April 2025?+

Expenditure already in your capital allowance pool carries on. HMRC says writing-down allowances can continue to be claimed after April 2025 until the pool is used up or a small-pool claim is made. New spending is not eligible, though replacements may qualify for Replacement of Domestic Items Relief.

How many nights must a holiday let be let to pay business rates in England?+

It must be available to let for at least 140 nights and actually let for at least 70 nights in the previous 12 months. In Wales the figures are 252 days available and 182 days let. In Scotland they are 140 and 70 nights in the financial year.

Do long contractor bookings count towards the 70 nights?+

The rules count letting for short periods, so a single booking lasting many weeks may not be treated the same way as holiday stays. Check with the Valuation Office Agency in England, or your local assessor in Scotland, before relying on long bookings to meet the test.

Will I have to use Making Tax Digital for my holiday let?+

Only if your combined income from self-employment and property is above the threshold: more than £50,000 from April 2026, £30,000 from April 2027 and £20,000 from April 2028. Below that, you file a Self Assessment return as before.

Does the loss of FHL status mean I should sell?+

Not automatically. The answer depends on your mortgage, your tax band, your other properties and how the letting performs. Because the anti-forestalling rule restricts reliefs on sales agreed from 6 March 2024, take advice before agreeing any sale. If you would rather keep the property working through the quiet months, you can see where guests are looking or read how crews request accommodation.

Holiday Let Tax and Business Rates in 2026/27: What UK Hosts Need to Know

Overview

What ended with the furnished holiday lettings regime

Tell hosts what you are looking for

What you keep

Selling a former FHL

Business rates or council tax: the 140 and 70-night test

What the bill looks like after the 2026 revaluation

Council tax premiums on second homes

Making Tax Digital for Income Tax

Pricing with the new numbers in mind

Dates to put in the diary

Frequently asked questions

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