What you can claim on a holiday let now: expenses and capital allowances after abolition

This is the year it bites. The furnished holiday let regime was abolished on 6 April 2025 for Income Tax and Capital Gains Tax (1 April 2025 for Corporation Tax), so your 2025/26 return, due by 31 January 2027, is the first one where your holiday let is treated like any other residential let. Below I will set out the one big change to capital expenditure, what now stands in its place, and the everyday expenses you can still deduct, with the revenue-versus-capital table from our guide reproduced and explained.

The headline change: capital allowances are gone

Under the old FHL rules, a holiday let was taxed largely as if it were a trade. That gave it one substantial advantage on the spending side: capital allowances. You could claim relief for the cost of capital items in the property, things like fixtures, fittings, white goods and the integral features of the building (electrical and plumbing systems, for example), and deduct those costs against your profit.

That treatment ended with the regime. From April 2025, a furnished holiday let is a standard residential property business, and residential lets have never been able to claim capital allowances on items inside a dwelling. So the practical effect is straightforward: the cost of buying a new oven, refitting a bathroom or upgrading the kitchen is no longer deductible against your rental profit in the way it once was.

That is the change behind most of the confusion in the boxes on your return. The good news is that there is a relief that picks up part of the gap, and a good chunk of your everyday spending was always deductible and still is.

What replaces them: replacement of domestic items relief

The relief that now applies to your furnishings and appliances is replacement of domestic items relief. It is the same relief every residential landlord uses, and it is narrower than the old capital allowances were, so it is worth understanding exactly where the lines fall.

In short, it covers the cost of replacing domestic items you provide for your tenants' use, such as:

• movable furniture, for example beds and free-standing wardrobes

• furnishings, for example curtains, carpets and other floor coverings

• household appliances, for example fridges, freezers and televisions

• kitchenware, for example crockery and cutlery

Three conditions decide whether you can claim, and they are where holiday let owners most often go wrong:

1. Replacements only, never the first one. You cannot claim for the initial cost of buying an item for the property. The relief only applies when you replace an item that was already there. Kitting out a property for the first time gets you nothing under this relief.

2. Like-for-like, not an upgrade. If the new item is an improvement on the old one, you can only claim the cost of an equivalent replacement, not the upgrade. HMRC's own example: if you replace a sofa (say £400 to buy like-for-like) with a sofa bed costing £550, you can claim £400 and the extra £150 gets no relief. An item is an "improvement" when it is not substantially the same, when its function has changed (a sofa to a sofa bed), or when you have upgraded the quality of the material (synthetic carpet to wool, for instance).

3. A reasonable modern equivalent still counts as like-for-like. You are not penalised for the fact that you cannot buy a 2015 fridge in 2026. Replacing an old fridge with a current model that happens to be more energy efficient is not an "improvement"; the full cost qualifies.

One more point that catches people: the old item has to actually be replaced. You deduct the cost of the new item, less anything you get for the old one if you sell or part-exchange it, plus any incidental costs of disposal or purchase.

Revenue vs capital: what is deductible now

The cleanest way to think about your spending is the split between revenue and capital. Revenue expenses are the running costs of the property and the cost of keeping it in the condition it was in. Capital expenses change or improve the property itself. Revenue comes off your profit on your Self Assessment return; capital does not.

Here is the split, reproduced from our guide:

Reading it across:

• Repairs restore the property to its previous condition. Replacing roof tiles after a storm, fixing a broken boiler, redecorating between guests to put right wear and tear: all revenue, all deductible.

• Maintenance is the ongoing cost of keeping the property running and let.

• Like-for-like replacements of furniture and appliances are covered by replacement of domestic items relief, as above. Renewing fixtures that are part of the building, such as a bath, basin or toilet, is normally treated as a repair and is allowable, as long as it is a like-for-like replacement and not an improvement.

On the capital side:

• Modifying the property (knocking through a wall, reconfiguring the layout) is capital.

• Upgrading the property to a better standard than before is capital, not a repair.

• Upgrading items like kitchen units or white goods, going beyond a like-for-like swap, is capital, and the upgrade element gets no relief against your rental income.

Capital costs are not lost forever. They generally add to the property's base cost for Capital Gains Tax, so they can reduce the gain when you sell. That is a different calculation in a different year, covered in Sell, hold, or incorporate? Your options now. But for the income on your return now, capital spending does not reduce your tax bill the way it used to under the old capital allowances rules.

The everyday expenses you can still claim

Plenty of your spending is straightforward revenue expenditure and remains fully deductible against your rental income, just as it is for any residential let. As long as a cost is incurred wholly and exclusively for the property business, you can usually claim:

• letting agent and management fees

• insurance, including landlord buildings, contents and public liability cover

• cleaning, gardening and the wages of people providing services

• utility bills and council tax where you pay them rather than the guest

• accountancy fees

• ground rents and service charges

• advertising for new bookings, and direct costs such as relevant phone calls and stationery

Where a cost is only partly for the business, you claim the business proportion. The full list and the detail sit with HMRC, and you can read the official guidance on allowable expenses when you let property. For recording all of this in Provestor, see the help centre's article on allowable expenses.

Transitional capital allowances: existing pools

If you claimed capital allowances on your holiday let in earlier years, you will have built up a capital allowances "pool" of unrelieved expenditure. The good news is that the pool does not disappear when the regime ends.

Where qualifying expenditure was already in a capital allowances pool by 5 April 2025, you can carry on claiming writing-down allowances on that pooled expenditure after April 2025, along with any balancing allowances or charges, until the pool is used up or you make a small pool claim. What you cannot do is add new expenditure to it.

So the principle going forward is clear: from April 2025 you cannot create new capital allowances on a residential holiday let. Your existing pool runs off under the old rules, but new capital spending follows the revenue-versus-capital rules above, and replacement of domestic items relief covers like-for-like replacements of furnishings.

A quick word on mortgage interest

One cost that is not on the table above, because it works through a separate mechanism, is mortgage interest. Holiday lets lost full mortgage interest relief at the same time and now fall under the Section 24 rules: instead of deducting the interest, you get a basic-rate (20%) tax relief. If you are a higher-rate taxpayer, that is often the single biggest change to your bill. I have covered it in full in How holiday lets are taxed now: the changes that hit your bill, so I will not repeat the detail here.

Where this leaves you

The shape of it is this: capital allowances are gone, replacement of domestic items relief picks up like-for-like swaps of furniture and appliances (replacements only, no upgrades, no first purchase), and your everyday running costs are deductible as they always were. The thing to get right is the revenue-versus-capital line, because that is where the relief is either claimed or lost.

If you would rather hand the whole return to someone who does holiday let tax every day, that is what our holiday let accountancy service is for. For the bigger questions about whether to keep the property, sell it or move it into a company, read Sell, hold, or incorporate? Your options now, or start back at the furnished holiday let guide.

Frequently asked questions

Can you still claim capital allowances on a furnished holiday let?

No. Capital allowances were withdrawn from April 2025. Replacement of domestic items relief applies instead, and it covers like-for-like replacements only.

What expenses can I claim on a holiday let now?

The everyday running costs: letting and management fees, insurance, cleaning and gardening, utilities and council tax where you pay them, repairs and maintenance, accountancy fees, ground rents and service charges, and advertising for bookings.

Can I still claim for replacing furniture and appliances?

Yes. Replacement of domestic items relief covers the like-for-like cost of replacing furniture, furnishings, appliances and kitchenware. The first purchase of an item, and any upgrade element when you replace it, do not qualify.

What happens to capital allowances I claimed before April 2025?

Expenditure already in a capital allowances pool by 5 April 2025 keeps attracting writing-down allowances, along with any balancing allowances or charges, until the pool is used up. You cannot add new expenditure to it.