Using former FHL losses

From 6 April 2025, furnished holiday lets (FHLs) are treated the same as other lets for tax purposes. Landlords with both holiday accommodation and other properties calculate profit for the entire property business (residential and commercial combined), using total income and expenses. Individual property results do not need to be calculated for tax purposes (though landlords may still do so for performance monitoring).

If one property makes a loss, it is automatically offset against profits from other properties. If the property business as a whole makes a loss, it can be carried forward and offset against future profits of the same property business.

Losses made in 2024/25 and earlier
Previously, FHL profits and losses were calculated separately. Losses from FHLs could only be carried forward against future FHL profits, and losses from other lettings could not be set against FHL profits.

From 6 April 2025, all properties owned in the same capacity are combined. Brought-forward losses, regardless of origin, can be offset against profits from the combined property business.

Example:
A landlord has two residential properties, a commercial property, and two holiday lets. On 6 April 2025, the holiday lets have unrelieved losses of £10,000. In 2025/26, the combined property business makes a profit of £32,000. The £10,000 losses are set against this, reducing taxable profit to £22,000.