Planning — C5 use class and 90-day rule
- Use Class C5 (introduced January 2025): exclusive SA use requires planning permission for change from C3 to C5 — local authority enforcement risk for non-compliant operators
- Greater London only: Deregulation Act 2015 allows letting of owner's main home for up to 90 nights per year without planning permission — does not apply to investment properties or outside London
- Article 4 Directions: many local authorities outside London restrict permitted development rights for short-term lets — check local planning portal before converting to SA
- Planning breach (continuous use): no time limit on enforcement for continuous planning breach — local authority can issue Enforcement Notice requiring cessation of SA use
FHL abolition — tax changes from April 2025
FHL regime abolished 6 April 2025
Finance Act 2025 abolished the Furnished Holiday Lettings tax regime. From 6 April 2025, SA income is taxed as ordinary property business income. Mortgage interest restriction (Section 24), replacement domestic items relief (not capital allowances), and residential CGT rates all apply.
- Mortgage interest: Section 24 restriction applies from April 2025 — only 20% basic rate credit, not full deduction
- Capital allowances: no longer available on SA furnishings — replaced by replacement domestic items relief (cost of like-for-like replacement only)
- Pension contributions: SA income is not relevant UK earnings from April 2025 — pension contribution relief limited to other earned income
- CGT: Business Asset Disposal Relief (BADR) no longer available on SA property sales — residential CGT rates (18%/24% from October 2024) apply
VAT
- SA is standard-rated for VAT (20%) — unlike residential lettings (VAT-exempt). Register when total taxable turnover exceeds £90,000 per annum
- VAT-registered SA operators can recover input VAT on cleaning, consumables, maintenance, renovation
- Mixed portfolio (SA + residential): partial exemption rules apply — professional advice required to apportion input VAT correctly
- DAC7 platform reporting: HMRC receives SA income data automatically from Airbnb, Booking.com, VRBO — undeclared SA income is a compliance risk
Business rates vs council tax
- England threshold: available for SA 140+ days/year AND actually let 70+ days/year → assessed for business rates (not council tax)
- Small Business Rate Relief (SBRR): rateable value ≤£12,000 → 100% relief (no rates payable); £12,001-£15,000 → tapered relief
- Council tax (if thresholds not met): some councils apply up to 100% council tax premium on empty or short-term let properties (Levelling-Up and Regeneration Act 2023)
- Wales (from April 2023): higher thresholds (252 days available, 182 days let) — many SA properties fall back to council tax and face 300% council tax premium in some Welsh councils
Operational compliance
- Fire safety: smoke alarms every floor, CO detector in rooms with solid fuel appliances, annual gas safety check, EICR every 5 years
- EPC required — no minimum rating for SA lets currently, but energy performance affects platform search ranking
- HMO risk: simultaneous multi-household guests may constitute an HMO — mandatory licence required for 5+ occupants from 2+ households
- Short-term let licensing: some London boroughs are introducing or consulting on SA licensing schemes — check borough position