CG60287 - Reliefs: replacement of business assets (roll-over relief): furnished holiday lettings
Abolition of the furnished holiday lettings rules
From 6 April 2025 (1 April 2025 for Corporation Tax), furnished holidays lettings (FHLs) are no longer treated as a trade.
This means rollover relief is not available where:
the old asset is disposed of on or after 6 April 2025
or the new asset is acquired on or after 6 April 2025
for the purposes of a holiday lettings business.
However, relief is still available where:
an asset used in an FHL business was disposed of before 6 April 2025
a valid claim is made for the gain to be rolled over into the acquisition of an asset used in an actual trade
(See ).
The example below shows how the rules on the interaction with private residence relief continue to apply.
Roll-over relief for furnished holiday lettings
Roll-over relief was previously available for assets used for the purposes of commercial letting of furnished holiday accommodation, as defined in
(for Capital Gains Tax)
(for Corporation Tax on chargeable gains)
See PIM4100. This guidance uses the term FHL to describe properties meeting the legislative criteria.
Furnished holiday lettings treated as a single trade
treated all UK FHLs held by a person or partnership or body of persons in the UK as assets of a single trade for roll-over relief.
On 22 April 2009 HMRC announced that FHLs located outside the UK but within the European Economic Area (EEA) would also be treated as assets of the same trade for roll-over relief. This applied from the latest of:
1 January 1994
the date the relevant country joined the EEA
the date on which the property was first let as an FHL
The EEA consists of all those EU member states plus Norway, Liechtenstein, and Iceland.
For disposals on or after 6 April 2011 (or, for companies, in accounting periods beginning on or after 1 April 2011):
deemed all EEA (non-UK) FHLs to be a single trade, separate from the UK FHL trade
allowed gains from one deemed FHL trade to be rolled over against acquisitions in the other, provided the two trades were carried on at the same time or successively
Interaction with private residence relief
The normal rules of roll-over relief are modified if both of the following apply:
a chargeable gain has been deducted from the acquisition cost of FHL accommodation under or
part of the gain on the disposal of that accommodation qualifies for private residence relief (see and CG64200P)
Where these conditions are met, restricts private residence relief to the part of the gain exceeding the amount that was rolled over.
Example: interaction of FHL rules with private residence relief
In January 2021, a property qualifying as FHL accommodation is sold for £340,000 giving rise to a £150,000 chargeable gain.
The owner reinvests the full proceeds in September 2022 into a qualifying replacement property costing £450,000.&²Ô²ú²õ±è;
The new property is used as FHL accommodation and is therefore a relevant asset (until the FHL rules are abolished from 6 April 2025). 
In September 2024, the owner begins to use the new property as their only or main residence.
They sell the property in September 2027 for £500,000.
Computation
The revised acquisition cost of the new property: £450,000 (acquisition cost) – £150,000 (rolled-over gain) = £300,000
Gain before private residence relief: £500,000 (disposal proceeds) – £300,000 (revised acquisition cost) = £200,000
Portion potentially eligible for private residence relief: £200,000 (gain) – £150,000 (roll-over gain) = £50,000
Private residence relief calculation - relief is due for three out of six years of ownership: 3/6 × £50,000 = £25,000
Chargeable gain: £200,000 – £25,000 = £175,000