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Furnished Holiday Lets and the Impacts of Coronavirus

The impact of Coronavirus on those who operate Furnished Holiday Lets (FHL) is undoubtedly going be significant, with reduced bookings meaning a reduction in income.

Unfortunately, there may be another sting in the tail.


In order to take advantage of the tax benefits of an FHL, the business needs to meet certain criteria each year, which I have outlined below:

  • THE AVAILABILITY CONDITION: the accommodation must be available for commercial letting to the public generally as holiday accommodation for a minimum of 210 days during the ‘relevant period’ (normally the tax year).
  • THE LETTING CONDITION: the accommodation must be commercially let as holiday accommodation for a minimum of 105 days during the ‘relevant period’ (normally the tax year).
  • THE PATTERN OF OCCUPATION CONDITION: during the ‘relevant period’ (normally the tax year), there must not be more than 155 days falling in ‘periods of longer-term occupation’, in other lets of more than 31 days in duration.

Depending on how long the lockdown lasts and what the lasting effects may be on tourism in the UK, it may be difficult for landlords to meet the ‘letting condition.’ On the face of it, falling short means that the property would cease to qualify as an FHL.

Established Furnished Holiday Lets

There is some good news for those of you with established FHL businesses. Properties which have previously met the letting condition often fail it in the following year or two, despite a genuine intention to meet the condition. In these cases, an election may be made to treat that property as qualifying holiday accommodation.

So, if your FHL met the qualifying conditions in 2018/19, you could continue to enjoy the benefits of FHL status in 2019/20 and 2020/21 even if the ‘letting condition’ is not met in either of those years. If you had already met the letting condition for 2019/20 before Coronavirus hit, then you will potentially have a grace period for 2020/21 and 2021/22.

Qualifying for a letting condition grace period

In order to qualify for this grace period, you will simply have to be able to evidence to HMRC that you had a genuine intention to meet the condition. HMRC guidance accepts that lettings cancelled due to adverse weather conditions qualify for a grace period, so I am certain that a lockdown situation such as we have now will also be covered.

New furnished holiday let businesses

Unfortunately, a grace period does not extend to new FHL businesses. Instead, you will need to meet the qualifying criteria throughout the 365-day period from the first commercial letting of the property. Importantly, this does not be the tax year. Depending on when your property was first let, you may have time after lockdown to meet the conditions for year one of your new business.

Good new for FHL owners

Several measures already announced will be of direct benefit to FHL business owners:

Tax payment deferral

  • Income Tax: your second payment on account for 2020/21 which would have been due by 31 July 2020 has been deferred to 31 January 2021
  • VAT: if your FHL business is VAT registered, there is an automatic offer to defer VAT payments during the period 20 March to 30 June until the end of the 2020/21 tax year.

Business rates holiday

  • For those of you paying business rates on your FHL properties, there is a 12-month business rates holiday for 2020/21.

Grant support connected to business rates status

  • In addition to the business rates holiday, there is also grant funding available for retail, hospitality and leisure businesses of:

£25,000 if your rateable value is between £15,000 and £51,000, or

£10,000 if your rateable value is below £15,000


If you have any questions about your personal circumstances, please do not hesitate to contact me via email:


Client Area

Tax Investigations Protection