The special tax treatment for furnished holiday lets (FHLs) officially ended on 5 April 2025. From the 2025/26 tax year onwards, holiday properties are now taxed just like any other residential rental.
If you and your partner jointly own a holiday property, this change could have a direct impact on your tax bill—and now is the time to review your setup to see if making a Form 17 election could save you money.
Here’s what you need to know.
What’s Changed for Jointly Owned Holiday Lets?
Under the now-defunct FHL rules, joint owners—whether married, in a civil partnership or not—had flexibility in how they split rental profits for tax purposes. You could divide the income in any way you agreed, regardless of your ownership shares.
From 6 April 2025, however, standard rental income rules apply.
This means that if a holiday let is jointly owned by spouses or civil partners, the income will now be taxed on a 50:50 basis, by default—even if you own the property in different proportions.
That could mean more tax than necessary, depending on each partner’s income level.
What Is a Form 17 Election?
A Form 17 election allows spouses or civil partners to split property income in line with their actual ownership shares, rather than automatically 50:50.
But there are some important rules:
- The property must be owned as tenants in common, not joint tenants.
- The ownership shares must be unequal.
- The election must be signed and submitted to HMRC within 60 days.
- It applies from the date it’s made—you can’t backdate it.
Case Study: How Form 17 Could Save Tax
Let’s look at an example.
Robert and Vanessa jointly own a holiday cottage on the Suffolk coast, which earns £20,000 in rental profit each year.
- Robert earns £90,000 a year (higher-rate taxpayer)
- Vanessa earns £20,000 a year (basic-rate taxpayer)
Under the old FHL rules, they chose to split the profits 5% to Robert and 95% to Vanessa. That meant:
- Robert paid higher-rate tax on just £1,000
- Vanessa paid basic-rate tax on £19,000
Under the new post-FHL rules (from 2025/26), unless they take action, they’ll be taxed 50:50—so each is taxed on £10,000.
That moves £9,000 from Vanessa’s basic-rate band into Robert’s higher-rate band, costing them £1,800 more in tax.
To preserve the tax efficiency, they’d need to:
- Own the property as tenants in common, with Vanessa owning 95% and Robert 5%.
- Submit a Form 17 to HMRC to reflect this.
- Transfer shares between them if necessary—using spouse exemption rules for capital gains tax, so no CGT is triggered.
When a Form 17 Election Doesn’t Help
A Form 17 election isn’t always the best move.
For example, if the higher earner owns more than 50% of the property, the default 50:50 split could result in a lower overall tax bill.
So, before making an election, it’s worth checking how it would impact your total household tax.
What Should You Do Now?
If you and your spouse or civil partner jointly own a holiday let, it’s time to:
- Review your ownership structure
- Consider how the income split affects your tax bill
- Decide whether a Form 17 election would reduce your tax
- Act fast—remember, once signed, you have just 60 days to file the election with HMRC
Need Help Deciding If Form 17 Is Right for You?
The end of the FHL regime means less flexibility and more planning. But with the right strategy, you can still keep your holiday property tax-efficient.
Not sure if a Form 17 election is worth it?
Get in touch with Jon or the team today—we’ll help you crunch the numbers, understand the implications, and make the smartest move for your situation.
If you found this useful, please share it using the icons at the side of the page, or leave a comment below.
Any questions?
If you’d like a meeting or a video call to discuss this, please get in touch with your favourite Liverpool accountant
- You can ring us on 0151 380 8080
- You can email us at gr****@*********************co.uk