I own a coastal property that I currently rent on a long-term tenancy, with income of £15,000 per year. Due to increasing demand from tourists, I am considering converting it into a short-term holiday let, with potential income of £30,000 per year. Would this change affect my tax position, and are there any tax reliefs available?
Arthur Weller replies:
The old 'furnished holiday lettings' rules stopped from April 2025 onwards. So now a short-term holiday let is taxed under the general residential property rules. Very obviously, the fact that you could make £30,000 gross income instead of £15,000 seemingly makes it a 'no-brainer' to go for this option. But you should be aware in advance that: (a) your expenses can be expected to be significantly higher; (b) the demands on your time will be significantly more; (c) there is much more 'hassle' in running such a short-term holiday let; and (d) earning an extra £15,000 may push you into higher rate tax.
