28 August 2026
Since the abolition of the tax favourable the Furnished Holiday Lettings regime in 2025/2026, FHL owners can no longer claim capital allowances on most new furniture and equipment purchases. Instead, they generally fall under the same Replacement of Domestic Items Relief rules as other residential landlords.
Replacement of Domestic Items Relief (RDIR) allows residential landlords to claim a tax deduction when they replace furnishings or domestic items provided for tenants.
When can relief be claimed?
The relief applies when:
- An item is provided for use in a dwelling.
- The original item is replaced.
- The old item is no longer available for the tenant's use.
- The replacement is for a like-for-like purpose, although it does not need to be identical.
What items qualify?
Common examples include:
- Beds and mattresses
- Sofas and armchairs
- Dining tables and chairs
- Curtains and carpets
- White goods such as fridges, freezers, washing machines and dishwashers
- Crockery and cutlery provided in holiday accommodation
How is the deduction calculated?
The deduction is broadly:
Cost of the replacement item less proceeds received on disposal of the old item (if any) plus any incidental costs of disposal and acquisition
Example
A landlord replaces a worn sofa:
- New sofa: £1,200
- Old sofa sold: £100
Tax deduction:
£1,200 − £100 = £1,100
What if the replacement is better than the original?
An important trap is that relief is only available for the replacement element.
For example:
- Old standard fridge replaced with a premium American-style fridge costing substantially more.
- The additional cost attributable to the improvement may not qualify.
In practice, a reasonable adjustment is usually made to exclude the improvement element.
What doesn't qualify?
The relief is not available for:
- The initial furnishing of a property.
- Adding a domestic item where one did not previously exist.
- Capital improvements to the property itself, such as a new kitchen, extension or bathroom.
For example, furnishing a newly purchased holiday let from scratch would not qualify for RDIR.
Why is this important for former FHL owners?
Before April 2025, many FHL operators could claim capital allowances on qualifying fixtures, furniture and equipment. Following the abolition of the FHL regime, new expenditure generally falls outside the capital allowances rules, making Replacement of Domestic Items Relief the main tax relief available for replacing furniture and household equipment.
The message - Keep invoices for replacement furnishings and appliances, as these costs may still be deductible even though the generous FHL capital allowance regime has been withdrawn.
For more advice, get in touch with our friendly Pembrokeshire team.
Haverfordwest – 01437 766749
Tenby - 01834 844743
