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HMRC internal manual

Property Income Manual

Capital allowances: furnished holiday lettings

Furnished holiday lettings are treated as a trade for certain purposes but remain taxable as property income and it is necessary to calculate the profit or loss from a furnished holiday letting separately from the rest of the property business (see PIM4100).

For the purposes of capital allowances furnished holiday lettings are treated as a trade (CAA01/S17). Therefore, capital allowances are allowable on plant and machinery used within the trade with any allowances treated as expenses of the trade and any charges treated as profits of the trade.

As furnished holiday lettings are treated as trades for the purpose of capital allowances it means that certain rules do not apply. For example, capital allowances are available on furniture, even though this is not allowed for furnished lettings.

There are special rules for losses generated from a furnished holiday letting, please refer to PIM4120 for further guidance.