Quick Summary
- The special furnished holiday lettings (FHL) tax regime was abolished from 6 April 2025.
- Holiday let mortgage interest now gets only a 20% tax credit, like other rentals.
- Capital allowances are no longer available on new spending; existing pools continue.
- Business Asset Disposal Relief no longer applies when you sell.
- In Scotland, short-term lets need a licence from the council.
Until April 2025, furnished holiday lets enjoyed tax advantages that ordinary buy-to-let landlords didn't. Those advantages have now gone. If you run an Airbnb, a self-catering cottage or a serviced apartment in Glasgow or elsewhere in Scotland, here's what has changed and what still applies.
What changed in April 2025
From 6 April 2025 (1 April for companies), the furnished holiday lettings regime was abolished. Holiday lets are now taxed like any other residential rental property.
| Before April 2025 (FHL) | From April 2025 | |
|---|---|---|
| Mortgage interest | Fully deductible | 20% tax credit only |
| Furniture and equipment | Capital allowances | Replacement of domestic items relief (replacements only) |
| Selling the property | Business Asset Disposal Relief possible | Normal CGT at 18%/24% |
| Pension contributions | Profits counted as earnings | Profits no longer count as relevant earnings |
| Joint owners (spouses) | Could split profits flexibly | Split by ownership share (or a declaration of beneficial interest) |
If you had an existing capital allowances pool, you can usually keep claiming writing down allowances on it. New furniture bought from April 2025 only gets relief when it replaces an old item. See our guide to Section 24 mortgage interest rules.
What you can still claim
- Cleaning, laundry and changeovers
- Platform commission (Airbnb, Booking.com, Vrbo) and card fees
- Utilities, broadband and streaming services included for guests
- Insurance, repairs and maintenance
- Licence fees and safety certificates
- Replacement furniture, appliances and furnishings (like-for-like)
- Accountancy fees
Scottish short-term let licensing
All short-term lets in Scotland need a licence from the local council, including letting a room or your whole home while you're away. Operating without one is a criminal offence. Glasgow City Council handles licences for Glasgow, and West Dunbartonshire Council for Clydebank. Some areas also have short-term let control areas that require planning permission.
Council tax or business rates?
In Scotland, a self-catering property is assessed for non-domestic rates instead of council tax if it's available to let for at least 140 days in the year and actually let for at least 70 days. Small properties may qualify for rates relief. If it doesn't meet the tests, council tax applies — and councils can charge a premium on second homes.
Is a holiday let still worth it?
For many owners, yes — holiday lets can still earn more than a long-term let. But higher-rate taxpayers with mortgages have been hit hardest. Options to review include paying down the mortgage, switching to long-term letting, or holding new properties through a limited company. See should landlords form a limited company?
Frequently Asked Questions
Has the furnished holiday lettings regime been abolished?
Yes. The FHL tax regime ended on 6 April 2025 for individuals (1 April 2025 for companies). Holiday lets are now taxed like other residential rental property.
Can I still deduct mortgage interest on a holiday let?
Not in full. From April 2025, individuals get a 20% tax credit on holiday let mortgage interest instead of a full deduction, the same as other residential landlords.
Do I need a licence for Airbnb in Scotland?
Yes. All short-term lets in Scotland need a licence from the local council, including letting a room or your home while you're away.
Do holiday lets in Scotland pay council tax or business rates?
A self-catering property pays non-domestic rates if it's available to let for at least 140 days a year and actually let for at least 70 days. Otherwise council tax applies.
Can I still claim capital allowances on a holiday let?
Not on new spending from April 2025. Existing capital allowance pools can usually continue, and replacement furniture can be claimed under replacement of domestic items relief.
Run a Holiday Let or Airbnb?
We'll make sure your holiday let is taxed correctly under the new rules and claim every allowable cost.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.