FHL Regime Abolished from April 2025 – What Joint Owners Need to Know

From 6 April 2025, the Furnished Holiday Letting (FHL) regime was abolished as part of the new Finance Act 2025. If you own an FHL property jointly with your spouse or civil partner, this change could affect how your profits are taxed – and action may be needed to avoid paying more tax than necessary.

What’s changing?

Until 5 April 2025, the FHL rules allowed married couples or civil partners to split the income from a jointly owned holiday let however they chose. For example, you could have chosen to split it 90:10, even if you both owned the property equally.

From 6 April 2025, that flexibility ended. FHL properties will no longer be treated differently for tax purposes. This means:

• If you and your partner own the property jointly, the profits will automatically be split 50:50 for tax purposes – unless you officially tell HMRC otherwise.

Why does this matter?

Let’s say one of you is a basic rate taxpayer, and the other pays higher rate tax. A 50:50 split could lead to a bigger tax bill if more of the income is taxed at the higher rate.

What can you do?

If you and your partner do not want a 50:50 tax split, you may be able to declare unequal beneficial ownership and submit Form 17 to HMRC.

Here’s what you need to know:

• Form 17 tells HMRC that you own the property in unequal shares and want to be taxed that way.

• You must actually own the property unequally (e.g. 60:40 or 90:10) – not just agree to split the profits differently.

• You can’t make a Form 17 declaration if you own the property as joint tenants – you’d need to change to tenants in common.

• You’ll also need evidence of the unequal ownership – usually a declaration or deed of trust.

Important: Timing and Rules

• The Form 17 must be signed by both of you and received by HMRC within 60 days.

• It only takes effect from the date the second signature is added.

• It can’t be backdated – so plan ahead.

• You should speak to a legal or tax adviser before changing ownership shares, as there may be other tax consequences (like Stamp Duty, Inheritance Tax, etc.).

Final Thoughts

If you’re a married couple or in a civil partnership and own a Furnished Holiday Let, don’t ignore this change. The abolition of the FHL regime could have real tax consequences, especially if one of you pays tax at a higher rate.

Review your ownership structure now and get professional advice if needed.