Furnished Holiday Let Allowable Expenses — What You Can Claim After April 2025
Last updated: May 2026
If you run a furnished holiday let, the difference between allowable and non-allowable expenses is the difference between a clean, defensible tax position and an avoidable HMRC problem. This guide covers the complete post-April 2025 position in plain English.
Most day-to-day running costs remain fully deductible under standard UK property income rules.
Three things changed significantly in April 2025: mortgage interest relief, capital allowances on initial furnishing, and CGT treatment on disposal.
Everything else — management fees, insurance, repairs, cleaning, professional fees, advertising — continues to apply under the same wholly and exclusively test it always did.
Important: this guide is educational and does not replace personalised tax advice. Rules vary by individual circumstance. If you are unsure about any item — particularly repairs vs improvements or private use apportionment — confirm your approach with a qualified accountant before filing.
Furnished holiday let allowable expenses are costs paid wholly and exclusively to run the holiday let commercially, deductible from rental income to calculate taxable profit. Management fees, insurance, repairs, cleaning, utilities, professional fees and advertising remain fully deductible. From April 2025, mortgage interest is restricted to a 20% basic rate credit, capital allowances on initial furnishing are removed, and CGT on disposal is at residential rates (18–24%) rather than the old 10% BADR rate.
Run the income estimate before pressure-testing costs and tax position
Conservative net monthly figures for your postcode — already deducted for management fee, based on comparable managed properties.
What changed in April 2025 — and what the “wholly and exclusively” test still means
The Furnished Holiday Let regime was abolished from 6 April 2025.
The practical headline is this: you can still deduct normal allowable expenses for running your holiday let business — but the three specific FHL advantages (mortgage interest deductibility, capital allowances, and BADR on sale) are gone.
The test for all remaining allowable expenses is unchanged: costs paid wholly and exclusively for the commercial letting — that is, costs you would not have incurred but for running the holiday let as a business — are deductible against rental income.
Classification matters more than before: the distinction between a repair (revenue expense, deductible) and an improvement (capital expenditure, not deductible) is now where the significant decisions sit.
Mortgage interest is no longer deductible against rental income. A 20% basic rate tax credit applies instead — equal to 20% of the mortgage interest paid, regardless of your income tax band.
Basic rate (20%) taxpayer: no material change. The 20% credit equals what a full deduction would have produced.
Higher rate (40%) taxpayer: significant impact. £1,000 of interest previously saved £400 in tax; it now saves £200.
Additional rate (45%) taxpayer: the same £1,000 would previously have saved £450 and now saves £200.
This only affects mortgaged properties. Owners with no mortgage are unaffected. Confirm the specific impact on your position with a qualified accountant.
Capital allowances on furniture, appliances and equipment are no longer available from April 2025. The initial cost of furnishing a holiday let is not immediately deductible.
Replacement Domestic Items Relief (RDIR) applies instead for ongoing replacements. Conditions:
- The item being replaced must already exist in the property — first purchase is not covered
- The replacement must be like-for-like or equivalent standard — upgrading to a higher specification means only the like-for-like cost is deductible
- The old item must no longer be in use at the property
Ongoing replacement costs (replacing a worn mattress, broken washing machine, worn linen) remain deductible. Initial setup furnishing is not.
BADR at 10% — previously available on qualifying FHL disposals — is no longer available. CGT on disposal of a holiday let is now charged at standard residential rates: 18% for basic rate taxpayers and 24% for higher rate taxpayers.
This affects only the gain on eventual sale — not the income earned while operating. The annual CGT exempt amount is £3,000 (2025–26). Capital improvement costs (see below) added to the property’s base cost reduce the taxable gain on sale.
For owners considering selling soon, the move from 10% to 24% on a significant gain is material. Quantify the specific impact with an accountant before deciding on timing.
Allowable expenses — the full list with what HMRC expects to see as evidence
Allowable expenses are costs paid wholly and exclusively for the commercial letting.
In plain terms: if you would not have paid the cost but for running the holiday let as a business — and it is not a capital improvement — it is likely deductible.
Always keep a short note explaining the business purpose of any borderline item alongside the receipt.
| Category | Examples | HMRC-friendly evidence |
|---|---|---|
| Management fees | Letting agent commission, Airbnb/Booking.com platform fees, channel manager, Stayful management fee (15% + VAT) | Monthly statements, commission invoices, payout reports |
| Utilities | Gas, electricity, water, broadband, TV subscription, refuse collection | Supplier bills, bank statements, contract PDFs |
| Cleaning and laundry | Cleaner invoices, linen/laundry service, consumables used in changeovers | Invoices dated to match bookings, supplier receipts |
| Repairs and maintenance | Fixing a leak, replacing a broken lock, boiler servicing, garden maintenance, redecorating (like-for-like) | Before/after photos, invoices, note: “repair not improvement” |
| Insurance | Buildings, contents, public liability, specialist holiday let insurance | Policy schedule, premium invoice, proof of payment |
| Professional fees | Accountancy fees for holiday let accounts, inventory clerk reports | Invoice, engagement letter |
| Advertising and marketing | Photography, listing copywriting, paid ads, website hosting for the let | Receipts, ad platform invoices, campaign notes |
| Consumables | Toiletries, welcome packs, tea and coffee, cleaning products, lightbulbs | Receipts with a note of guest use — avoid mixing with personal shopping |
| Travel and mileage | Travel to manage the property (inspections, meeting contractors, restocking) | Mileage log (date, purpose, start/end, miles), receipts for parking/tolls |
| Council tax / business rates | Whichever applies to your property in the relevant period | Bill and proof of payment |
| Compliance costs | Gas safety certificate, EICR, PAT testing, fire risk assessment, licensing fees | Certificate, invoice, payment confirmation |
| Bank charges | Interest and fees on a dedicated business account for the letting | Bank statements highlighting the charges |
| Furniture replacement (RDIR) | Like-for-like replacement of existing sofa, fridge, curtains, linen | Invoice for new item, evidence old item existed and needed replacing |
Common “no” items — not allowable against rental income:
- The purchase price of the property and costs of acquisition (legal fees, stamp duty)
- Initial furnishing and equipping when the property is first set up (capital, not revenue)
- Capital improvements — adding an extension, new kitchen refit at a higher standard
- Personal costs paid at the same time as property spending — split receipts carefully
- Any cost linked to private stays where no apportionment has been applied
- Mortgage capital repayments (only the interest element is relevant, and only via the 20% credit)
Setup costs vs running costs — how to classify spending so you do not over-claim
This is where most holiday let owners get stuck.
“I bought X for the holiday let — can I deduct it?” The honest answer: it depends what X is, and whether it is a running cost, a repair, a replacement, or an improvement.
| Type of spend | Typical examples | How to treat it |
|---|---|---|
| Running costs | Utilities, cleaning, routine maintenance, insurance, platform fees | Deductible against rental income if wholly and exclusively for the let. |
| Repairs | Fixing broken items, patching a leak, replacing a broken lock, like-for-like redecoration | Usually deductible. Keep notes and photos to show it is a repair, not an upgrade. |
| Replacements (RDIR) | Replacing an existing sofa, fridge, curtains, linen with a like-for-like equivalent | Deductible via Replacement Domestic Items Relief. Evidence that the old item existed and required replacing is essential. |
| Initial furnishing | Buying furniture and appliances for a newly launched holiday let from scratch | Capital in nature from April 2025. Not immediately deductible against income. Adds to property base cost for CGT. |
| Improvements | Adding an extension, converting a garage, new kitchen at higher specification | Capital. Not deductible against income. Reduces CGT gain on eventual sale. Keep a clear schedule of works. |
Fast examples — repair or improvement?
- Boiler service: running cost / maintenance — deductible.
- Fixing a broken window: repair — deductible. Keep the invoice description clear: “repair broken window” not “window work.”
- Replacing a like-for-like fridge: RDIR replacement — deductible. Keep proof the old fridge existed.
- Replacing a single-glazed window with double-glazing: improvement element is capital. Only the cost of like-for-like replacement would be deductible; the upgrade premium is not.
- Converting a garage into a bedroom: improvement — capital, not deductible against income.
- Repainting walls in the same colour: maintenance — deductible.
What evidence HMRC expects — the records checklist that makes enquiries manageable
If HMRC ever asks questions, the goal is simple: show what you spent, why it was for the business, and how you split it if there was any private use.
The following checklist covers everything needed for a well-documented holiday let expense position.
Record-keeping checklist — copy and use for each expense:
- Receipt or invoice for every claimable cost. PDF or photo is acceptable.
- Proof of payment — bank line item, card transaction, or platform statement confirming the amount was paid.
- Short description of purpose — “guest changeover cleaning,” “repair leak in bathroom,” “annual gas safety certificate.” One sentence is enough.
- Dates linking the cost to the period the property was commercially let.
- Apportionment notes for any cost with mixed or private use — how you calculated the business proportion and what method you applied.
- Supporting evidence for repairs and replacements — photos, contractor notes, or a description of the condition before repair. Before-and-after photos are the strongest defence for borderline items.
- Mileage log for any travel claimed — date, start location, end location, miles, purpose.
Practical filing tip: create one folder per tax year, with monthly subfolders. Drop invoices in as they arrive and name files consistently — for example: 2026-03-cleaning-changeover-£95.pdf. It is dull, but it reduces the year-end accounting time significantly and makes any HMRC enquiry straightforward to respond to.
Private use, mixed use and apportionment — the part most people overlook
If you stay in the property yourself, or use a cost partly for personal reasons, you cannot claim the full amount as a business expense.
The fix is apportionment: split the cost between business use and private use in a way that is reasonable and consistently applied.
Apportionment methods that work:
- Time-based: claim costs for the days the property is commercially available or let, and exclude the private stay nights. For example, if the property is let for 220 days and used privately for 30 days, the business proportion is 220/250 of annual costs.
- Room-based: where a cost only relates to a specific room — for example, replacing a bedroom blind.
- Usage-based: for utilities if metering data exists — less common but very defensible where available.
Choose a method, document it in a short note, and apply it consistently year on year. Inconsistent apportionment is harder to defend than any specific reasonable method.
Mileage and travel — what you can claim and what your log must contain
Travel is one of the easiest expense categories to get wrong because it is also one of the easiest to mix with personal journeys.
You can claim travel that is genuinely for managing the commercial let — inspections, meeting contractors, restocking guest supplies, attending compliance appointments at the property.
You cannot claim travel that is personal, even if it happens to pass by the property.
What to record in the mileage log for every trip:
- Date of the journey
- Start location and end location
- Total miles driven
- Purpose — for example: “inspect leak reported by guest,” “meet electrician for EICR,” “restock guest consumables.”
- Any receipts for parking or tolls claimed separately
If a trip includes personal errands, separate the business mileage from the personal mileage and claim only the business element. When in doubt on any grey miles, do not claim them.
Common mistakes that create problems — and how to avoid each one
- Claiming initial furnishing as running costs without any accounting support for the classification. From April 2025, initial furnishing is capital — it is not a revenue deduction.
- Mixing personal shopping receipts with guest consumables. If a supermarket receipt includes both guest toiletries and your personal groceries, HMRC cannot distinguish them. Split purchases where possible or keep separate receipts.
- No apportionment applied even though the owner uses the property personally for multiple weeks of the year. This overstates the allowable expense percentage.
- Vague invoice descriptions — “bathroom work” rather than “repair leaking pipe under bath” or “replace broken shower head.” The description on the invoice is the first thing an HMRC officer reads. “Work” is not a description.
- No booking linkage for cleaning and laundry invoices. Tie changeover invoices to booking dates where possible — it makes the business purpose of each payment immediately clear.
- Mileage claimed without a log. Without a contemporaneous log, a mileage claim is very difficult to defend. Reconstruct it from diary records if the log was not kept at the time — but a real-time log is always stronger.
- Claiming the full cost of a mixed-use expense where the business proportion is clearly not 100% — for example, a utility bill for a period that included a 3-week owner stay with no apportionment applied.
How to track and claim holiday let expenses — a monthly process that takes 20–30 minutes
The following process keeps the administrative burden light while creating an audit-ready trail.
Run it monthly, not annually — costs that are unclear at year-end are much clearer when they are reviewed within 30 days of being incurred.
Monthly expense tracking checklist:
- Export income statements from your booking platforms or channel manager for the month.
- Upload all receipts and invoices to the relevant month folder. Name files with date, category, supplier and amount.
- Categorise each cost using the categories in the table above: utilities, cleaning, repairs, management, insurance, fees, marketing, consumables, travel.
- Add a one-sentence purpose note for any borderline item so the business reason is clear.
- Apply apportionment where any private or mixed use applies this month.
- Update your expense tracker and reconcile to bank statements for the month.
- Flag any repairs or improvements and retain supporting evidence (photos, contractor notes) in the same folder.
Simple expense tracker — column headings to copy into a spreadsheet
These eight columns cover everything needed for a holiday let expense record that satisfies both Self Assessment and any HMRC enquiry.
| Date | Supplier | Category | Description / purpose | Gross £ | Business % | Allowable £ | Receipt link |
|---|---|---|---|---|---|---|---|
| 2026-03-14 | ABC Cleaning | Cleaning | Changeover clean — booking ref #1841 | £95.00 | 100% | £95.00 | 2026-03-cleaning-abc-£95.pdf |
| 2026-03-22 | British Gas | Utilities | March gas bill — 22 of 31 days let | £84.00 | 71% | £59.64 | 2026-03-gas-britishgas-£84.pdf |
Holiday let expense questions — the ones owners actually ask
Allowable expenses are costs paid wholly and exclusively to run the holiday let commercially, which reduce rental income to calculate taxable profit.
Typical allowable expenses include: management and platform fees, utilities, cleaning and linen, repairs and maintenance, insurance, professional fees, advertising, consumables, travel and mileage, compliance costs, and like-for-like furniture replacements via Replacement Domestic Items Relief.
The three things removed from April 2025 are: full mortgage interest deductibility, capital allowances on initial furnishing, and BADR at 10% CGT on disposal.
Not as a direct deduction from April 2025. A 20% basic rate tax credit applies instead — equal to 20% of the mortgage interest paid regardless of your tax band.
For basic rate taxpayers, the practical effect is broadly similar to the old position. For higher-rate taxpayers, the tax cost is significantly greater — the credit saves £200 per £1,000 of interest, compared to £400 under full deductibility at the 40% rate.
Initial furnishing is capital expenditure from April 2025 and is not immediately deductible against rental income.
Replacement of existing items with like-for-like equivalents is deductible via Replacement Domestic Items Relief. The item being replaced must already exist in the property, and you must retain evidence that it needed replacing.
If you upgrade to a higher specification item, only the cost of the like-for-like equivalent is deductible — the upgrade premium is capital.
A repair restores something to its previous working condition — like-for-like, at the same standard. A repair is a revenue expense and is deductible against rental income.
An improvement upgrades the property beyond its previous standard — converting a loft, adding a bathroom, replacing single-glazed windows with double-glazing. An improvement is capital expenditure and is not deductible against income, but adds to the property’s base cost for CGT purposes.
The practical test: does the work restore what was there before, or does it leave the property in a materially better state than before? Keep photos and contractor notes that document the condition before work began.
Keep a receipt or invoice for every claimable cost, proof of payment, and a short note explaining business purpose. For repairs, keep photos or contractor notes showing what was repaired. For replacements, keep evidence the old item existed and required replacing.
For any cost with private use, document the apportionment method and the calculation used. Apply the same method consistently each year.
For mileage, keep a contemporaneous log with date, start/end location, miles, and business purpose for every trip.
Yes. Where you use the property privately, relevant costs must be split between business and private use. Only the business proportion is deductible.
A time-based split is the most common approach: claim costs for the days the property is commercially let or available to let, and exclude the days of private use.
Document the method, note the private nights taken, and apply the same approach consistently from year to year.
Yes, for travel that is genuinely for managing the commercial letting — inspections, meeting contractors for repairs, restocking guest supplies, attending compliance appointments at the property.
Keep a mileage log with date, start location, end location, miles, and business purpose for every trip. Separate business miles from any personal miles on the same journey. Without a contemporaneous log, a mileage claim is very difficult to defend under enquiry.
Tax disclaimer: this page covers general information about the current rules. Tax rules change and individual circumstances vary significantly. Always confirm your specific position with a qualified accountant who specialises in property income before making financial decisions or filing your Self Assessment return.
Want to see what your holiday let would net after all management costs? Run the income estimate or call the team.
See what your holiday let earns net of all fees and costs
Conservative net monthly income for your postcode — already deducted for management fee. What you would actually receive, not a gross projection.
Or call 0113 479 0251 to speak to the Stayful team. Updated May 2026.