Holiday Lets and Airbnbs in Shropshire - What's Changed and What You Need to Know
The Shropshire Hills attract visitors all year round, and if you own a holiday let or rent out a property on Airbnb, you'll know just how popular the area has become. But the tax rules around short term lets have changed significantly over the past year, and it's worth making sure you understand what those changes mean for you.
The end of the Furnished Holiday Let regime
Until April 2025, properties that qualified as Furnished Holiday Lets (FHLs) benefited from a range of favourable tax treatments that weren't available to ordinary landlords. From April 2025 that all changed — the FHL regime has been abolished and holiday lets are now taxed in the same way as any other residential rental property.
Here's what that means in practice:
Capital allowances on furniture, fixtures and equipment can no longer be claimed going forward — only the cost of replacing existing items is allowable
Profits no longer count as earned income for pension contribution purposes
Business Asset Disposal Relief (formerly Entrepreneurs Relief) on a sale is no longer available
If you previously benefited from any of these, it's worth reviewing your position. In some cases there may still be opportunities to claim capital allowances on expenditure incurred before April 2025, so it's worth checking whether any amendments are possible.
What you can still claim
The good news is that plenty of expenses are still allowable against your holiday let or Airbnb income:
Mortgage interest — though this is now subject to the finance cost restriction that applies to all residential landlords, meaning you get a basic rate tax credit rather than a deduction from profits
Repairs and maintenance
Insurance, letting agent fees, advertising
Utilities if included in the rental price
Replacement of domestic items such as sofas, beds and white goods on a like for like basis
Accountancy fees
What about Airbnb income — does it need to be declared?
Yes — if you're renting out a property or even a room on Airbnb, that income needs to be declared to HMRC. There is a property income allowance of £1,000 per year which means small amounts may not need to be reported, but anything above that needs to go on a Self Assessment tax return.
HMRC also now receives data directly from platforms like Airbnb, so it's important to make sure your returns are accurate and up to date.
Making Tax Digital — does it affect holiday let owners?
Possibly yes. If your income from self employment and property combined exceeds £50,000 you'll need to comply with Making Tax Digital for Income Tax from April 2026, with lower thresholds of £30,000 from April 2027 and £20,000 from April 2028.
This means keeping digital records and submitting quarterly updates to HMRC rather than one annual tax return. If you're not already using accounting software it's worth starting to think about this now.
Not sure where you stand?
The changes to holiday let taxation have caught a lot of people out and there's quite a bit of misinformation around about what you can and can't claim. If you own a holiday let or Airbnb property in Shropshire and you're not sure how the changes affect you, I'm happy to have a chat.
I'm Ellie, a chartered certified accountant based in Church Stretton. I work with landlords, holiday let owners and small businesses across South Shropshire and I'm currently welcoming new clients.
Get in touch at enquiries@indiefinancials.co.uk or call 01694 721142 for a friendly, no obligation chat.