Jointly owned holiday lets – Should you make a Form 17 election?

The favourable tax regime for furnished holiday lettings (FHLs) came to an end on 5 April 2025. For 2025/26 and later tax years, furnished holiday lets are treated in the same way as other residential lets for tax purposes. This significant change affects thousands of property owners across the UK—particularly those who own jointly with spouses, business partners, or family members. If you’re in this position, understanding your options is crucial. One tool that may still work in your favour is the Form 17 election, which allows you to elect for partnership treatment of jointly owned property. But should you make this election? Let’s explore what’s changed and what it means for your tax bill.

What changed on 5 April 2025?

Until 5 April 2025, furnished holiday lets enjoyed special status under UK tax law. They were treated more favourably than standard residential lettings, allowing landlords to claim capital allowances, relief for losses, and eligibility for the trading allowance (up to £1,000 of income without reporting). These benefits made FHLs attractive to property investors.

From 6 April 2025 onwards, furnished holiday lets are treated as ordinary residential lettings. This means:

Capital allowances are no longer available
Losses cannot be carried forward to offset other income (unless you’re a company)
The trading allowance no longer applies to FHL income
Mortgage interest relief is restricted to the basic rate of tax (20%)

For many property owners, this represents a material increase in tax liability. However, there’s a potential mitigation strategy if your property is jointly owned: the Form 17 election.

Understanding the Form 17 election

The Form 17 election allows two or more individuals who jointly own a property to elect for it to be treated as if owned by a partnership. Once elected, the property is treated as a trading business, which can unlock certain reliefs and reliabilities that wouldn’t otherwise be available.

For jointly owned holiday lets, this election may allow you to:

Potentially recover some of the loss of the trading allowance benefit by structuring income splits
Allocate profits and losses between co-owners in proportions that suit your individual circumstances
Claim trading reliefs, such as loss carry-forward (though this remains subject to the £50,000 annual restriction under trading loss relief caps)

Importantly, the election doesn’t restore the pre-5 April 2025 regime. You still can’t claim capital allowances or full mortgage interest relief. But it can provide planning opportunities that a simple joint ownership structure cannot.

Who should consider making the election?

A Form 17 election is worth exploring if:

You own the property jointly (typically with a spouse or business partner)
Your individual tax positions differ significantly—for example, one owner is a higher-rate taxpayer and the other is a basic-rate taxpayer
You want flexibility in how profits and losses are allocated between owners
You believe trading loss relief may be relevant to your circumstances

The election is less beneficial if you own the property solely, or if both joint owners are in the same tax bracket with similar income levels.

Important considerations before you elect

Before proceeding, bear in mind:

The election is permanent and cannot easily be reversed
It may trigger the requirement to register for Self Assessment or Corporation Tax, depending on your structure
If either owner is a company, partnership treatment rules differ significantly
You’ll need to file a partnership tax return (Form SA800) with HMRC, in addition to individual returns
The administrative burden increases—you’ll need to maintain separate partnership records and allocations

There’s also an important deadline consideration. To be effective for the 2025/26 tax year, any Form 17 election should ideally be made by 5 April 2026. If you’re considering this, timing is essential.

What should you do now?

If you jointly own a furnished holiday let, don’t assume your previous tax arrangements carry forward. The regulatory landscape has shifted significantly. The first step is to review your current position: calculate what your tax bill would look like under the new rules, then assess whether a Form 17 election would genuinely improve it.

This isn’t a decision to rush. It requires careful analysis of your personal circumstances, your co-owner’s position, and your medium-term property plans.

For tailored advice, contact Severn Accounting — we’re here to help.