What Is a Holiday Let?
What Is a Holiday Let?
A holiday let is a furnished property rented to guests for short stays, rather than being occupied as their main home.
Our UK guide explains what counts as a holiday let, how holiday let income is taxed, allowable expenses, business rates, planning considerations and whether to own the property personally or through a limited company.
Quick answer: Holiday lets typically provide furnished accommodation to paying guests for periods ranging from a few nights to several weeks. They are different from conventional buy-to-let properties occupied by longer-term residential tenants.
What Is a Holiday Let?
A holiday let is a furnished property rented to guests for short stays, usually for holidays, leisure or temporary accommodation, rather than as their main home. Holiday lets typically operate on a short-term basis, with guests staying for anything from a few nights to several weeks.
Examples include holiday cottages, coastal apartments, converted barns, lodges, cabins and city properties advertised through short-term letting platforms.
In simple terms: if you furnish a property and repeatedly rent it to paying guests for short stays rather than providing somebody with their permanent home, you are likely to be operating a holiday let.
What Counts as a Holiday Let in the UK?
There is no single definition that determines the treatment of a holiday let for every UK tax, planning and regulatory purpose. Different rules can apply depending on whether you are considering Income Tax, Corporation Tax, business rates, planning permission, licensing or safety regulations.
In everyday terms, a holiday let will normally have most of these characteristics:
- The property is furnished
- Guests stay for relatively short periods
- It is marketed commercially to paying guests
- The owner intends to generate rental income
- Guests do not occupy it as their main home
- Bookings may change throughout the year
- The owner normally pays utilities and running costs
- Cleaning and changeovers take place between bookings
This distinguishes a holiday let from a conventional residential property rented to a tenant as their home.
Holiday Let vs Buy-to-Let
Although both involve earning income from property, a holiday let and a conventional buy-to-let operate quite differently.
| Feature | Holiday Let | Typical Buy-to-Let |
|---|---|---|
| Occupancy | Short guest stays | Longer-term residential occupation |
| Furnished | Normally yes | May be furnished or unfurnished |
| Main home | Normally no | Usually the tenant's home |
| Turnover of occupants | Frequent | Much less frequent |
| Utilities | Usually paid by owner | Often paid by tenant |
| Management | More active | Usually less intensive |
| Income | Can fluctuate seasonally | Typically more predictable |
| Local rules | Short-let rules may apply | Residential landlord rules apply |
How Are Holiday Lets Taxed in the UK?
This means that from the 2025/26 tax year onwards, individuals operating short-term furnished holiday accommodation generally calculate their property income under the normal residential property business rules.
The old FHL qualification tests should therefore not be confused with the separate tests that may still determine whether a property is subject to business rates rather than Council Tax.
If You Own the Holiday Let Personally
Rental income and allowable expenses generally form part of your property business. The resulting taxable profit is normally reported to HMRC through Self Assessment where reporting is required.
Individual residential landlords should also be aware of the rules restricting Income Tax relief for residential property finance costs. The old FHL exemption from those restrictions no longer applies.
If a Limited Company Owns the Holiday Let
Where the property is owned by a limited company, rental profits form part of the company's taxable profits and are subject to Corporation Tax. The company may generally obtain relief for qualifying finance costs under the corporation tax rules, but further personal taxation can arise when profits are extracted from the company.
Does a Holiday Let Pay Council Tax or Business Rates?
This is a separate question from how the rental profit is taxed. A holiday property may fall within the business-rates system if it satisfies the relevant conditions.
Holiday Lets in England
In England, a self-catering property will generally be valued for business rates where the relevant conditions are satisfied, including:
- Available commercially for short stays for at least 140 nights in the previous 12 months
- Actually let commercially for at least 70 nights during that period
- Intended to be available commercially for at least 140 nights in the following 12 months
- Relevant qualifying stays are generally short stays of 28 nights or less
If the conditions are not satisfied, the property will normally remain within the Council Tax system instead.
Important: Wales, Scotland and Northern Ireland have different rules. Do not assume that the English thresholds apply throughout the UK.
Is a Holiday Let a Business?
A holiday let is normally operated as a commercial property activity: guests pay for accommodation, expenses are incurred in generating that income and the owner may actively advertise, clean and manage the property.
However, the word “business” can have different meanings for tax, business rates, planning and other legal purposes. Simply calling a holiday let a business does not automatically give it a particular tax treatment.
This distinction has become particularly important since the abolition of the separate Furnished Holiday Let tax regime.
What Expenses Can a Holiday Let Claim?
Subject to the normal tax rules, costs incurred wholly and exclusively for the property business may be deductible when calculating taxable rental profit.
Capital improvements are generally treated differently from repairs. Residential landlords may also be able to claim Replacement of Domestic Items Relief when qualifying furniture, furnishings, appliances and similar domestic items are replaced.
Should I Buy a Holiday Let Personally or Through a Limited Company?
A holiday let can be owned personally or through a limited company. Neither structure is automatically more tax-efficient in every situation.
| Consideration | Personal Ownership | Limited Company |
|---|---|---|
| Tax on rental profit | Income Tax | Corporation Tax |
| Finance costs | Residential finance-cost restrictions can apply | Different corporation tax rules apply |
| Taking income | Profit belongs directly to owner | Further tax may arise when money is extracted |
| Administration | Generally simpler | Accounts and company filings required |
| Retaining profit | Limited scope to defer personal taxation | Profits can potentially remain within company |
| Sale | Capital Gains Tax may apply | Company tax and possible extraction tax need consideration |
The appropriate structure depends on factors such as your existing income, borrowing, expected rental profits, whether you need to withdraw the income and whether you intend to build a larger property portfolio.
Do You Need Planning Permission for a Holiday Let?
Planning requirements depend on where the property is situated, its existing planning use and how intensively it will be used for short-term accommodation.
Local planning authorities can impose restrictions, and the rules differ between England, Wales, Scotland and Northern Ireland.
What About Holiday Lets in London?
Greater London has specific rules for short-term accommodation. In broad terms, residential premises can normally be used as temporary sleeping accommodation for up to 90 nights in a calendar year without planning permission where the statutory conditions are met. Letting beyond the permitted limit may require planning permission.
Always check the position with the relevant local authority before buying a property specifically for short-term letting.
What Rules Apply to Holiday Let Owners?
Running a holiday let involves more than declaring the rental income. Depending on the property and location, owners may need to consider:
- Fire-safety requirements
- Gas safety where applicable
- Electrical safety
- Appropriate insurance
- Planning restrictions
- Local licensing requirements
- Business rates or Council Tax
- Mortgage or lender restrictions
- Leasehold restrictions where relevant
- Tax and record-keeping requirements
Requirements can differ substantially across the UK, so owners should check the rules applying to the specific property and local authority.
Holiday Let Advantages and Disadvantages
| Potential Advantages | Potential Disadvantages |
|---|---|
| Potentially higher nightly rental rates | Income can be seasonal |
| Ability to vary prices throughout the year | Higher cleaning and management costs |
| Potential for personal use when available | More active management required |
| Strong demand in popular locations | Greater regulatory complexity |
| Opportunity to build a hospitality/property business | Bookings and occupancy are not guaranteed |
What Should You Check Before Buying a Holiday Let?
The tax structure should ideally be considered before you buy, because transferring a property into a company later can potentially create tax and transaction costs.
Before purchasing, consider:
- Expected annual occupancy
- Realistic nightly rates
- Seasonal demand
- Mortgage costs
- Cleaning and management fees
- Platform commissions
- Repairs and maintenance
- Business rates or Council Tax
- Planning and licensing restrictions
- Personal vs limited-company ownership
Accountant's tip: compare the expected after-tax profit and cash flow, rather than simply comparing the headline nightly rental income with a conventional buy-to-let.
Holiday Let FAQs
What is the definition of a holiday let?
A holiday let is generally a furnished property provided to paying guests for short-term holiday or temporary accommodation rather than as their main home. Different definitions and tests can apply for tax, planning and business-rates purposes.
Is Airbnb classed as a holiday let?
A property advertised through Airbnb may be a holiday or short-term let, but using Airbnb itself does not determine the property's tax, planning or business-rates status. The actual use of the property and the relevant rules must be considered.
Do holiday lets still get special tax treatment?
The UK's former Furnished Holiday Let tax regime has been abolished. It ended from 1 April 2025 for Corporation Tax and from 6 April 2025 for Income Tax and Capital Gains Tax. Holiday accommodation is now generally taxed under the normal property-income rules.
Do you pay tax on holiday let income?
Yes. Individuals are generally subject to Income Tax on taxable property profits, while a limited company pays Corporation Tax on its taxable profits. The precise amount depends on income, expenses, ownership structure and individual circumstances.
Does a holiday let pay Council Tax or business rates?
It depends on the location and how the property is made available and actually let. In England, qualifying self-catering accommodation can be assessed for business rates when the relevant availability and occupancy conditions are satisfied.
Can I live in my own holiday let?
Personal use may be possible, but it can affect commercial availability, business-rates tests and the tax treatment of expenses. Mortgage, planning, lease and insurance conditions should also be checked.
Can I buy a holiday let through a limited company?
Yes. A limited company can own and operate holiday accommodation. Whether this is appropriate depends on borrowing, expected profits, other income, future property purchases and how you intend to use or withdraw the profits.
Can I claim expenses against holiday let income?
Qualifying expenses incurred wholly and exclusively for the property business can generally be taken into account when calculating taxable profit. Different rules apply to capital expenditure, finance costs and replacement domestic items.
Is a holiday let the same as a buy-to-let?
No. A holiday let normally provides furnished short-term accommodation to changing guests, whereas a conventional buy-to-let is generally occupied by a residential tenant for a longer period as their home.
What Is a Holiday Let? The Bottom Line
A holiday let is a furnished property commercially rented to guests for short-term stays rather than as their permanent home.
For owners, however, the definition is only the starting point. Holiday lets can involve Income Tax or Corporation Tax, business rates or Council Tax, planning restrictions, safety requirements and local licensing rules.
The former Furnished Holiday Let tax regime no longer applies, making it particularly important to distinguish between the tax rules for rental profits and the separate business-rates and regulatory rules applying to short-term accommodation.
Need an Accountant for Your Holiday Let?
The Online Accountants can help holiday-let and property owners understand their tax position, allowable expenses, ownership structure and reporting obligations.
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