Sell, hold, or incorporate? Your holiday let options now

So the decision has changed shape. It is no longer "act before the window closes." It is "given where I now stand, do I sell, hold, or move the property into a company?" That is a personal-numbers question, not a one-size answer, and the right call depends on your gain, your other income, your mortgage and your plans for the property. This page walks through what each route involves so you can see the trade-offs clearly before you take advice on your own figures.

The decision now: there is no default

I want to be straight about this up front. There is no option here that is right for everyone. Selling crystallises a tax bill you might otherwise defer. Holding means living with a higher annual bill than you had before. Incorporating can help some owners, but the move itself can trigger tax and is the wrong answer for plenty of people who are sold on it too quickly.

The honest version is that this depends on numbers only you can put on the table: the gain sitting in the property, your income, whether the let is jointly owned, your mortgage, and whether you actually want to keep running it. Read the three routes below as a way of framing the conversation, not as a verdict.

If you sell: capital gains tax after abolition

The biggest change for anyone thinking about selling is that the reliefs that used to soften the tax on a holiday let disposal no longer apply.

Before abolition, a qualifying furnished holiday let was treated as a business asset for capital gains purposes. That opened the door to:

• Business Asset Disposal Relief (BADR), which gave a reduced capital gains tax rate of 10% on qualifying gains up to a £1 million lifetime limit per person, well below the standard residential rate.

• Business asset rollover relief, which let you defer the gain by reinvesting the proceeds in another qualifying business asset.

• Gift holdover relief, which let you pass the asset on and hold over the gain rather than paying it at the point of the gift.

After abolition, holiday lets no longer qualify as business assets for these reliefs, so BADR, business asset rollover relief and gift holdover relief are no longer available on a furnished holiday let disposal. For capital gains, the disposal date is normally the date of exchange of contracts rather than completion, so a sale only came under the old FHL reliefs if it was contractually committed before 6 April 2025.

What you pay instead

A holiday let is now taxed on disposal like any other residential property. For the 2025/26 tax year the residential rates of capital gains tax are 18% on any gain that falls within your unused basic-rate band and 24% on the gain above that. You deduct your annual exempt amount (£3,000 for 2025/26) and allowable costs first, then apply the rate.

There is also a reporting deadline that catches people out. When you sell UK residential property at a gain, you must report it and pay the capital gains tax due within 60 days of completion, using an HMRC Capital Gains Tax on UK property account. This is separate from your Self Assessment return, and missing it can mean interest and penalties.

If you were holding off a sale specifically to use BADR, that planning no longer works, and there is no transitional version of it to fall back on.

If you hold: what living with the change looks like

Plenty of owners will keep their property, and that is a perfectly reasonable choice. The point is to hold with your eyes open, because the year-to-year tax has changed.

The two changes that bite most are the ones covered in the earlier chapters of this guide. Mortgage interest is now caught by Section 24, so instead of deducting interest in full you get a basic-rate (20%) tax relief, which hits higher-rate owners hardest. And the generous capital allowances are gone, replaced by a narrower relief that only covers like-for-like replacements of domestic items. We cover both in detail in how holiday lets are taxed now and what you can claim now.

The practical effect is a higher annual bill on the same rental income, with less you can deduct. For some owners the numbers still work comfortably. For others, holding is fine for now but worth reviewing each year as rates and interest costs move.

If you incorporate: a real option, not a default

Moving a property into a limited company is the route people ask about most, usually because companies are not subject to Section 24 and can still deduct mortgage interest in full. That can be a genuine advantage, particularly for higher-rate owners with significant borrowing.

But incorporation is not a free switch, and I see it recommended far too casually. Transferring a personally-held property into a company is a disposal for tax purposes, which means:

• Capital gains tax on the transfer. You are treated as selling the property to the company at market value, so any gain can be taxable now, even though no cash changes hands. With BADR gone, there is no reduced rate to cushion that.

• Stamp Duty Land Tax (SDLT). The company is treated as buying the property, so SDLT can be due on the transfer, typically including the higher rates for additional dwellings.

• Mortgage and lending. A personal buy-to-let mortgage usually cannot simply move across. Refinancing into a company often means different products, rates and fees.

None of that makes incorporation wrong. For the right owner, with the right gain and the right time horizon, the annual saving can outweigh the one-off costs. For the wrong owner it is an expensive way to make a problem worse. This is exactly the kind of decision worth modelling properly before you commit. If you want to understand how a holiday let sits inside a company, our tax consultation service is built around this.

Jointly owned lets: an extra question

If you own the property with a spouse, family member or business partner, there is one more layer. Under the old regime you had flexibility over how profits were split. That flexibility has gone, and income is now divided strictly by ownership share, with Form 17 needed to reflect unequal beneficial shares between spouses or civil partners.

That changes the maths on all three routes. Whether you sell, hold or incorporate, who owns what proportion now drives who pays the tax. For jointly owned lets, an ownership-restructure review often belongs in the conversation before any of the bigger decisions are made.

Frequently asked questions

Do you still get Business Asset Disposal Relief on a furnished holiday let?

No. BADR, business asset rollover relief and gift holdover relief no longer apply to furnished holiday let disposals after 6 April 2025.

What capital gains tax do you pay when you sell a holiday let now?

Standard residential rates: 18% on gains within your unused basic-rate band and 24% above it, after deducting your annual exempt amount and allowable costs. You must report the disposal and pay the tax within 60 days of completion.

Should I sell my holiday let now the reliefs have gone?

There is no blanket answer. It depends on the gain in the property, your other income, your mortgage and your plans for it. It is worth modelling your own figures before you decide either way.

Should I move my holiday let into a limited company?

Companies are not subject to Section 24, which can help higher-rate owners with sizeable mortgages. But transferring the property triggers Capital Gains Tax and Stamp Duty Land Tax, so incorporation only works for some owners. Take advice on your numbers first.

Choose your next step