Furnished holiday let allowable expenses: what you can claim (and what HMRC expects)
If you’re running a furnished holiday let (FHL), the difference between “allowable” and “not allowable” expenses is the difference between a clean, defensible tax position and an avoidable headache. This guide breaks it down in plain English: what you can usually deduct, how to separate setup costs from running costs, what evidence HMRC expects, and how to keep records that stand up if you’re ever asked.
Allowable expenses are costs you pay wholly and exclusively to run your furnished holiday let business (for example utilities, cleaning, insurance, repairs, and platform fees), which you can deduct from rental income to work out your taxable profit.
One-line formula: Taxable profit = rental income − allowable expenses (− any other permitted deductions/reliefs).
- Added an “at a glance” jump module to surface key answers quickly.
- Expanded setup vs running cost rules and strengthened HMRC evidence guidance.
- Improved internal linking within relevant sections (not just at the bottom).
At a glance
- Allowable expense categories (table)
- Common “no” items and pitfalls
- How to classify spending
- Repairs vs improvements (fast examples)
Estimate your Airbnb income
Want a quick sense-check on revenue before you dive into expense tracking? Use our calculator to estimate potential short-let income.
What changed after April 2025 (and what didn’t)
“FHL” is still a useful phrase landlords use day-to-day, but the special tax regime that gave furnished holiday lettings extra advantages was removed from April 2025. The practical headline is: you can still deduct normal allowable expenses for running your holiday let business, but classification (repair vs improvement, private use, and evidence) matters more than ever.
- Still true: Running a holiday let creates taxable profit = income − allowable expenses.
- Now more important: whether a cost is a repair (often deductible) or an improvement (typically capital).
- Best practice: keep records and a clear “why” note for anything borderline.
If you’re exploring whether a furnished holiday let is the right model, start with the revenue side, then pressure-test the costs. The quickest way to do that is: run a revenue estimate, then overlay conservative expenses. Useful references: income calculator and pricing.
Allowable expenses list (table)
Allowable expenses are generally costs that are wholly and exclusively for the commercial letting. In plain terms: if you wouldn’t have paid the cost but for running the holiday let (and it’s not a capital improvement), it often belongs here. Always keep notes that explain the “why” for any borderline item.
| Category | Examples | HMRC-friendly evidence |
|---|---|---|
| Utilities | Gas, electric, water, Wi-Fi, TV/satellite subscription, refuse collection | Supplier bills, bank statements, contract PDFs |
| Cleaning & laundry | Cleaner invoices, linen/laundry costs, consumables used for changeovers | Invoices, dates matched to bookings, supplier receipts |
| Repairs & maintenance | Fixing leaks, replacing a broken lock, boiler servicing, garden maintenance | Before/after photos, invoices, brief notes: “repair not improvement” |
| Insurance | Buildings, contents, liability cover, specialist holiday let insurance | Policy schedule, premium invoice, proof of payment |
| Professional fees | Accountant/bookkeeper fees, inventory clerk reports (where used) | Invoice + engagement letter (if relevant) |
| Platform/agent fees | Letting agent commission, Airbnb/Booking platform fees, channel manager | Monthly statements, commission invoices, payout reports |
| Marketing | Photography, listing copywriting, paid ads, website hosting (if used for the let) | Receipts, ad platform invoices, campaign notes |
| Consumables | Toiletries, welcome packs, tea/coffee, cleaning products, lightbulbs | Receipts + note of guest use (avoid personal shopping bundles) |
| Travel & mileage | Travel to manage the let (inspections, repairs), mileage where applicable | Mileage log (date, reason, start/end, miles), receipts for parking/tolls |
| Property taxes | Business rates/council tax (as applicable), licences/permits (where applicable) | Bill + proof of payment + dates covered |
| Bank charges | Interest/fees on a dedicated business account (if used) | Bank statements highlighting charges |
- Personal costs that happen to be paid near the same time as property spending (split receipts are your friend).
- Upfront purchase of the property, and many “improvement” projects that increase value/standard (capital).
- Any costs linked to private stays (unless you clearly apportion).
If you’re planning a hands-off approach, it helps to understand what gets handled operationally vs what stays with you. See Holiday Let Management (what’s included) and Pricing (fee structure).
Setup vs running costs: how to classify spending (so you don’t over-claim)
This is where most landlords get stuck: “I bought X for the holiday let… so can I deduct it?” The honest answer is: it depends what X is, and whether it’s a running cost, a repair, a replacement, or an improvement/capital project.
| Type of spend | Typical examples | How to treat it (plain English) |
|---|---|---|
| Running costs | Utilities, cleaning, routine maintenance, insurance, platform fees | Often deductible against rental income if wholly/exclusively for the let. |
| Repairs | Fix broken items, patch leak, replace like-for-like damaged parts | Often deductible (keep notes/photos to show it’s a repair, not an upgrade). |
| Replacements | Replacing a sofa, fridge, curtains, kitchenware (where replacing existing items) | Usually easier to defend when you can show “old item existed + needed replacement”. |
| Initial furnishing | Buying furniture and appliances for a newly-launched holiday let | Often treated as setup/capital in nature. Don’t assume it’s a simple day-to-day deduction. |
| Improvements | Adding an extension, upgrading to a materially higher spec, major refit | Usually capital. Keep a clear schedule of works; ask your accountant where the line sits. |
- Boiler service: running cost / maintenance.
- Fixing a broken window: repair (keep the invoice description clear).
- Replacing a like-for-like fridge: replacement (keep proof the old one existed).
- Converting a garage into an extra bedroom: improvement (capital).
If you’re investing upfront and want to sanity-check whether the deal works, estimate revenue first, then stress-test with conservative costs. Use the income calculator, then compare against your likely running cost profile and management option. For fees and inclusions, see Airbnb management fees UK and pricing.
What evidence HMRC expects (records checklist)
If HMRC ever asks questions, the goal is simple: you want to be able to show what you spent, why it was for the business, and how you split it if there was any private use.
- Receipts/invoices for every claimable cost (PDF or photo is fine).
- Payment proof (bank line item, card transaction, or platform statement).
- Short description of the purpose (“guest changeover cleaning”, “repair leak in bathroom”).
- Dates that link the cost to the period the property was commercially let.
- Apportionment notes for mixed/private use (how you calculated the split).
- Supporting evidence for repairs/replacements (photos, contractor notes, before/after).
- Mileage log for travel claims (date, reason, start/end, miles).
A practical tip: create a single folder per tax year, then subfolders for each month. Drop invoices in as they happen and label files consistently (e.g., 2026-01-cleaning-changeover-£95.pdf). It’s boring, but it makes year-end accounting dramatically faster.
If you’d prefer not to manage the operational side at all (cleaning coordination, guest comms, pricing, maintenance triage), a management partner can reduce the admin load while you keep ownership-level oversight. See Holiday Let Management and pricing.
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Private use, mixed use, and apportionment (the bit most people forget)
If you stay in the property yourself, or you use a cost partly for personal reasons, you generally can’t claim the full amount as a business expense. The fix is apportionment: split the cost between business and private use in a way that’s reasonable and repeatable.
- Time-based split: claim costs for the days/weeks the property is commercially available/let (and exclude private stays).
- Room-based split: where a cost only relates to one room (e.g., replacing a bedroom blind).
- Usage-based split: for utilities if you have good metering data (less common, but very defensible).
Whatever method you choose, write it down once (in a simple “policy note”) and apply it consistently. If you want a revenue baseline to help decide what’s worth doing (and what’s not), use the income calculator.
FHL mileage and travel: what you can claim (and what to write in your log)
Travel is one of the easiest categories to get wrong because it’s also one of the easiest to mix with personal trips. If you claim mileage or travel costs, keep your log tight.
- Date
- Start location → end location
- Miles driven
- Purpose (e.g., “inspect leak”, “meet electrician”, “restock guest supplies”)
- Any receipts for parking/tolls (if claimed separately)
If your trip includes personal errands, separate the business mileage from the personal mileage. When in doubt, don’t claim the grey miles.
Common mistakes landlords make with holiday let expenses
- Claiming initial furnishing as “running costs” without any notes or accounting support for classification.
- Mixing personal shopping receipts with guest consumables (HMRC can’t guess what was for guests).
- No apportionment even though the owner stays in the property.
- Vague invoice descriptions (“bathroom work”) instead of “repair leaking pipe” / “replace broken handle”.
- No booking linkage for cleaning/laundry (tie invoices to changeovers if possible).
- Over-claiming travel without a mileage log.
If you’re comparing DIY vs managed, these pages help you see what the “hands-off” route typically covers: Holiday Let Management, Pricing, and Airbnb management fees UK.
HowTo: track and claim allowable expenses for a furnished holiday let (simple process)
Here’s a process you can run monthly in 20–30 minutes. It keeps admin light, while still creating an audit-friendly trail.
- Export income statements from your booking platform(s) (or your channel manager).
- Upload receipts/invoices into a “Tax Year → Month” folder.
- Label each cost with a category (utilities, cleaning, repairs, marketing, fees).
- Add one sentence explaining purpose for any borderline item.
- Apply apportionment where needed (private stays, mixed-use costs).
- Update your tracker and reconcile totals to bank statements.
- Flag repairs vs improvements and keep supporting evidence (photos, contractor notes).
Template: simple tracker headings
Copy these columns into Google Sheets/Excel:
| Date | Supplier | Category | Description / purpose | Gross £ | Apportionment % | Allowable £ | Receipt link |
|---|---|---|---|---|---|---|---|
| 2026-01-18 | ABC Cleaning | Cleaning | Changeover clean (booking ref #1234) | 95.00 | 100% | 95.00 | Drive link / filename |
Want a quick income baseline before you build an expense tracker? Use the income calculator and keep your first-year assumptions conservative.
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FAQ: furnished holiday let allowable expenses
These are the questions people commonly ask when they’re trying to work out what they can claim and how to keep it defensible.
What are allowable expenses for a furnished holiday let?
Allowable expenses are costs you pay wholly and exclusively to run the holiday let commercially, which you can deduct from rental income to calculate taxable profit. Typical examples include utilities, cleaning, insurance, repairs, platform/agent fees, and marketing.
Can I claim the cost of furnishing a holiday let?
Initial furnishing is often treated differently from day-to-day running costs. Ongoing repairs and genuine replacements are usually easier to defend as deductions, while first-time furnishing and improvements may be capital in nature. If you’re unsure, get your accountant to confirm the classification approach.
What’s the difference between repairs and improvements?
Repairs restore something to its previous condition. Improvements upgrade it beyond its former standard. The difference matters because repairs are often deductible as revenue costs, while improvements are typically capital.
What evidence does HMRC expect for holiday let expenses?
Keep receipts/invoices, proof of payment, and a short note explaining business purpose. For repairs/replacements, add supporting evidence such as photos or contractor notes. If there is private use, document your apportionment method and apply it consistently.
Can I claim mileage for travelling to my holiday let?
You can often claim travel that’s genuinely for managing the commercial let (inspections, repairs, restocking). Keep a mileage log with date, route, miles, and purpose, and separate business miles from personal miles.
Do I need to apportion expenses if I stay in the property?
If you use the property privately, you should usually split relevant costs between business and private use. A simple time-based method is often easiest, as long as it’s reasonable and consistent.
Is there an easy way to estimate profit before I start tracking everything?
Yes: estimate revenue first, then apply conservative running-cost assumptions (cleaning, utilities, maintenance, platform fees). For a fast revenue baseline, use the Stayful income calculator.
Estimate your Airbnb income
If you’re weighing up a furnished holiday let, start with revenue—then pressure-test expenses and tax position with conservative assumptions.
About the author
Stayful Editorial Team — We write practical, UK-focused resources for landlords exploring short-term rentals and furnished holiday lets. Our content is designed to be clear, scannable, and rooted in reputable sources. For personalised tax advice, we recommend you confirm your specific situation with a qualified professional.