Holiday Lets

1. The tax rules for Furnished Holiday Lets (FHL) were abolished in April 2025. The information below is for reference only. For a summary of the impact of these changes see https://propertytax.wales/holiday-let-tax-rules/
2. FHLs qualify for valuable tax reliefs such as Business Asset Disposal Relief (BADR), Rollover relief and Capital Allowances. The profits will be counted as relevant earnings for pension purposes.
3. Best of all, the Section 24 rules on mortgage interest restriction DO NOT apply to FHLs! You get to claim 100% of the cost.
4. Qualifying Criteria. To qualify as an FHL for HMRC purposes your accommodation must be –
   • Furnished
   • Let on a commercial basis.
   • Available for letting to the public for 210 days per year.
   • Let for at least 105 days.
   • Periods of 31 days or greater are classed as a tenancy and do not count towards the 105/210 day tests.
5. Business Rates vs Council Tax. In Wales, Mr Drakeford likes to do things differently. In order for an FHL to qualify for Business Rates there are stricter rules than with HMRC.
   • Must be available for 252 days per year.Must be actually let for 182 days
   The Welsh Government criteria are assessed by the Valuation Office Agency (VOA). If the criteria are not met, you will be charged council tax. Not just any council tax though. Local councils have the option to levy a premium. For 2023, this is +50% in Conwy and Denbighshire, +75% on Anglesey, +100% for Flintshire and a whopping +150% in Gwynedd! Click here for more details.
6. So somewhat oddly, you can be a qualifying FHL for HMRC purposes, but not for your local council!
7. You’ll need to keep on top of your bookings and paperwork running a FHL. We recommend proper book-keeping software such as QuickBooks. It’s essential that you keep track of the the actual days let and your total availability.
8. You may be using an agency such as Sykes or Menai to manage your bookings. They are expensive, but a great way to reduce the admin.
9. VAT. If you’re doing well, then great, but remember holiday accommodation is chargeable to VAT. If your turnover is likely to reach £85,000 then you’ll need to register and charge VAT.

North Wales has a fantastic offering for tourists and owners of holiday lets like you play a huge role in this. Running an FHL is hard work though. Why not outsource the tax side of things to us so you can relax a little more?