Guide

Capital Gains Tax on Selling a Holiday Let After the FHL Regime Ended

Written by James Whitfield · Last checked 19 October 2026 Checked against GOV.UK and the HM Treasury/HMRC policy paper

Quick answer

The furnished holiday lettings (FHL) tax regime ended on 6 April 2025 for Capital Gains Tax.¹ A holiday let sold in 2026/27 is taxed like any other let property: the gain after costs and the £3,000 allowance is charged at 18% or 24%,² and for a UK property you report and pay within 60 days of completion.³ Business Asset Disposal Relief and business asset rollover relief no longer apply, so selling one holiday let to buy another does not defer the tax, except in a narrow transitional case for businesses that stopped before the change.¹

Key facts (2026/27)

FHL regime abolished on or after 6 April 2025 for Income Tax and CGT (1 April 2025 for Corporation Tax).¹
Reliefs that ended for FHLs: rollover relief, Business Asset Disposal Relief, gift relief, relief for loans to traders.¹
Transitional rule: if the FHL business ceased before the change, BADR may still apply to a disposal within the normal 3 years after cessation.¹
Anti-forestalling rule from 6 March 2024: unconditional contracts cannot be used to keep the old reliefs.¹
CGT rates: 18% within your unused basic-rate band, 24% above; £3,000 annual exempt amount.²
Figures checked 19 October 2026, before the Autumn Budget on 28 October 2026.

What changed when the FHL regime ended?

Before April 2025, a property that met the furnished holiday letting tests (available for at least 210 days a year and let commercially for at least 105) was treated as a trade for several capital gains reliefs. The government's policy paper lists them: FHL properties were eligible for "roll-over relief, business asset disposal relief, gift relief", relief for loans to traders and some company exemptions, and "after the changes eligibility for the reliefs will cease".¹

From 6 April 2025, income and gains from a holiday let fall into your ordinary UK or overseas property business. For a sale, that means the same treatment as a buy-to-let: no business reliefs, the main CGT rates and, for UK residential property, the 60-day return. See CGT on buy-to-let for the general rules.

Do you pay CGT if you sell a holiday let to buy another?

Yes, for a sale on or after 6 April 2025. Business asset rollover relief let a trader defer a gain by buying a replacement business asset within 1 year before or 3 years after the sale.⁶ Holiday lets qualified while the FHL regime existed. They no longer do, so buying a replacement cottage does not defer anything: the gain on the one you sell is taxed now.

If you rolled an earlier gain into a holiday let before the change, that relief is not withdrawn. Rollover works by reducing the cost of the replacement, so the deferred gain is simply part of the bigger gain when you sell that property. The policy paper confirms the specific rules "will not be disturbed where the FHL conditions are satisfied before repeal".¹

Can you still get Business Asset Disposal Relief?

In one situation. Where the FHL conditions were met for a business that ceased before the abolition, relief "may continue to apply to a disposal that occurs within the normal 3-year period following cessation".¹ BADR is 18% for disposals from 6 April 2026,⁵ the same as the lower main rate, so for a basic-rate taxpayer it saves nothing; it helps where the gain would otherwise be taxed at 24%.

The anti-forestalling rule applies from 6 March 2024 to stop unconditional contracts being used to obtain the old FHL reliefs.¹ If you exchanged before April 2025 but completed later, or the contract was with a connected person, take advice before relying on BADR.

Worked example: selling a holiday cottage in 2026/27

Gareth, a higher-rate taxpayer, bought a cottage in 2015 for £220,000 and paid £9,500 in Stamp Duty and legal fees. He added an en-suite and a garden room for £18,000. He let it to holidaymakers until he sold it in October 2026 for £385,000, with £7,700 of agent and legal fees. He never lived there and has no other gains.

Gareth's CGT on the cottage, 2026/27

Sale price	£385,000
Less selling costs	−£7,700
Less purchase price	−£220,000
Less Stamp Duty and legal fees on purchase	−£9,500
Less improvements	−£18,000
Gain	£129,800
Less annual exempt amount	−£3,000
CGT at 24% on £126,800, due within 60 days of completion	£30,432

If Gareth had stopped letting before April 2025 and qualified for BADR under the transitional rule, the £126,800 would be taxed at 18% (£22,824), £7,608 less. Buying another holiday let with the proceeds changes nothing: there is no rollover. Repairs, furnishings replaced like for like, mortgage interest and running costs are not deductible from the gain; see allowable costs.

Want the 60-day steps and a property gain worksheet on paper before you file? get the CGT Survival Pack, £4.99 →

How and when do you report the sale?

UK holiday let with CGT to pay: file a UK property return and pay within 60 days of completion.³ The step-by-step is in how to file the 60-day return.
Include it on your Self Assessment return for 2026/27 too, if you file one; the tax already paid is credited.
Holiday home abroad: no 60-day return; it goes on Self Assessment by 31 January 2028, with foreign tax credit relief if tax was paid locally (see CGT on foreign property).

Missing the 60 days brings a £100 penalty and interest: see late filing penalties.

How can you reduce the tax legally?

Claim every allowable cost: purchase and sale fees, Stamp Duty, and capital improvements still in the property.⁴
Joint ownership: each owner has their own £3,000 allowance and basic-rate band (see CGT on jointly owned property).
Pension contributions: extending your basic-rate band moves gains from 24% to 18% (see pension contributions and CGT).
Private Residence Relief applies only for periods it was genuinely your main home (see CGT on a former home).
Use capital losses from the same or earlier years (see CGT losses).

Frequently asked questions

Do I pay CGT if I sell a holiday let to buy another one?

Yes, for a sale on or after 6 April 2025. Business asset rollover relief was one of the reliefs that ended with the furnished holiday lettings regime, so buying a replacement holiday let no longer defers the gain. CGT is due at 18% or 24% and, for UK property, must be reported and paid within 60 days of completion.

Can I still claim Business Asset Disposal Relief on a holiday let?

Generally no. The government's policy paper says eligibility ceases with the regime, but where the FHL conditions were met for a business that ceased before the abolition, relief may still apply to a disposal within the normal 3 years after cessation.

When did the furnished holiday lettings regime end?

On 6 April 2025 for Income Tax and Capital Gains Tax (1 April 2025 for Corporation Tax). An anti-forestalling rule from 6 March 2024 stops unconditional contracts being used to keep the old capital gains reliefs.

Is a holiday let taxed differently from a buy-to-let now?

For CGT, no. From 6 April 2025 a holiday let is treated as part of an ordinary property business, so a sale is taxed like any other let residential property: 18% or 24% after costs and the £3,000 allowance.

Do I need a 60-day return for a UK holiday let?

Yes, if there is CGT to pay. A holiday let in the UK is residential property, so a UK resident with tax to pay must report and pay within 60 days of completion. A holiday home abroad goes on your Self Assessment return instead.

This page is general information, not tax advice. The transitional and anti-forestalling rules depend on dates and contract terms; take professional advice if your sale straddles April 2025 or you are relying on BADR.

Sources & references

The rates, allowances and rules in this guide are drawn from the official HMRC and GOV.UK sources below, checked for the 2026/27 tax year. Each link opens the relevant government page in a new tab.

Verified against published HMRC and GOV.UK guidance.