Capital Allowances for Holiday Lets

The Hidden Tax Relief Every Holiday Let Owner Should Know About

By Eureka Capital Allowances

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

The team at Eureka Capital Allowances have collaborated with Grandeur Property and provided both this guide but also their contact details for those seeking further advice on Capital Allowances for Furnished Holiday Lets.

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 can include a wide range of items, from electrical systems and heating to kitchen fittings, alarm systems, and much more.

These items are often already present in your property at the time of purchase or added during renovations, yet many owners are unaware that they can claim tax relief on them.

Why Furnished Holiday Lets Qualify

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

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

The Abolition of the FHL Regime

As announced in the Spring Budget of 2024, the government officially abolished the FHL tax regime from April 2025. From that date forward, FHLs are 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 your past eligibility. HMRC allows for claims to be backdated in many cases, provided the property qualified at the time and a claim hasn’t already been made.

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How Much Could You Still Claim?

The potential value of a claim depends on the specifics of your property, 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, 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 tax relief that most owners simply didn’t know about.

Can You Still Claim?

Yes! But time may be limited. Capital allowances claims must be completed by January 2027 for individuals or partnerships and April 2027 for limited companies.