Cornish Holiday-Let Tax Guide: Making Tax Digital in 2026

If you own a holiday let in Cornwall, Making Tax Digital is now a practical record-keeping question, not a distant change. From 6 April 2026, MTD for Income Tax applies to eligible individuals whose combined gross qualifying property and self-employment income was over £50,000 in 2024/25.

The next threshold is over £30,000 from April 2027. This guide explains who is affected, what to record and why your booking records matter for both HMRC and holiday-let business rates.

Making Tax Digital for holiday lets in Cornwall: does it apply to you?

The threshold is measured before expenses, per person, across your qualifying property income and any sole-trader income. It is not based on rental profit, the value of your cottage or your household's combined earnings.

• Jointly owned lets: each owner counts their own share. If a cottage's £70,000 gross rental income was split equally in both relevant years, each owner's £35,000 share would be below the 2026 threshold but above the 2027 threshold, assuming no other qualifying income or exemption.
• Add it all up: £35,000 of holiday-let income plus £20,000 from a surf school or consultancy in 2024/25 gives £55,000 of qualifying income for the April 2026 test.
• Company ownership: limited companies are outside MTD for Income Tax. Company-owned lets are subject to Corporation Tax instead, although MTD for VAT may apply if the company is VAT registered.
• Gross bookings matter: normally record the full booking income due to you, including the portion deducted as Airbnb, Booking.com or agency commission. Record the fee separately as an expense. Check the treatment against your actual agency contract rather than simply treating the net bank receipt as turnover.

There are exemptions, including where using digital tools is not reasonably practicable. Check HMRC's eligibility guidance or read our guide to MTD exemptions before assuming a threshold alone settles your position.

You need compatible software to keep digital records and send updates. A spreadsheet alone cannot submit to HMRC, but compatible bridging software can connect one. Our MTD support and landlord accounting service can help you understand the options.

MTD quarterly deadlines for holiday-let owners

You send four quarterly updates for each relevant business, followed by your tax return by 31 January after the end of the tax year. A quarterly update is not a tax bill: payment dates do not move to every quarter.

For the standard tax-year quarters in 2026/27:

The tax return for 2026/27 is due by 31 January 2028. Calendar-quarter periods are also available, with the same update deadlines. Check which basis your software uses and make sure your records are complete for each update.

Late updates: HMRC will not apply penalty points for late quarterly updates in 2026/27. This concession does not mean updates are optional, or that late payment is penalty-free. From 2027/28, the points-based rules apply, with a £200 penalty at the four-point threshold. Further missed deadlines after reaching the threshold can bring additional penalties.

The Cornish seasonality angle: July to October may carry much of your summer income, while winter is quieter. You still need the required update even when income is low or nil. Use quieter months to organise maintenance invoices, cleaning costs and booking reconciliations.

Furnished holiday lettings: the old tax perks have gone

The furnished holiday lettings (FHL) regime ended on 6 April 2025 for individuals and 1 April 2025 for companies. Former FHL income is now normally treated under the ordinary property income rules, rather than a separate FHL regime.

For an individually owned residential holiday let, the main changes include:

Form 17 is not a free choice of tax split. A declaration must reflect actual unequal beneficial ownership and meet HMRC's conditions, including the filing deadline and evidence requirements. Do not submit one simply because a different split would reduce your tax.

Existing capital allowance pools can generally continue under the transitional rules. Carried-forward FHL losses can normally be used against profits of the corresponding UK or overseas property business. The treatment depends on your circumstances, so review it before completing your return.

Company-owned properties have different finance-cost rules. Do not apply the individual mortgage-interest restriction to a company without checking the correct treatment.

April 2027: higher property income tax rates

The government's published tax measure sets out separate property income rates of 22%, 42% and 47% from 6 April 2027 for England, Wales and Northern Ireland. These are increases of two percentage points, not a 2% increase in your overall tax bill.

The measure also provides for the residential finance-cost tax reduction to use the new 22% property basic rate, subject to its normal limits. General allowances and reliefs are to be applied to other income before property, savings and dividend income.

As a simple illustration, £25,000 of taxable property profit falling entirely within the basic-rate band would produce £5,500 of tax at 22%, compared with £5,000 at 20%, before any applicable finance-cost tax reduction. Your actual bill depends on your other income, allowances and reliefs.

Read the official property income tax changes and have your accountant check the rules applying when you make a decision. Good digital records make it easier to model the change, but moving a property into a company can create tax and legal costs of its own.

Cornwall's second-home council tax premium and holiday-let business rates

Cornwall Council introduced a 100% council tax premium on second homes from 1 April 2025, normally doubling the council tax charge where the premium applies. Exceptions exist, so check your property's circumstances with the council.

A genuine self-catering holiday let may qualify for business rates instead. In England, the conditions include:

1. Commercial availability for short lets for at least 140 nights in the previous 12 months.
2. Actual commercial letting for at least 70 nights in that period.
3. An intention to offer the property commercially for at least 140 nights in the next 12 months.

The qualifying commercial short lets must be for 28 nights or less. Keep evidence of both availability and actual stays, not just an advert or a bank statement.

The Valuation Office Agency (VOA) decides whether the property belongs on the business rates list. Simply advertising it or registering as a business does not establish eligibility. Continue dealing with council tax bills while your rating position is being determined.

Business rates classification does not automatically mean you pay nothing. Any small business rate relief depends on the applicable conditions and your circumstances.

Why this connects with MTD: digital booking records, agency statements, invoices and bank reconciliations help substantiate your rental income. Keep availability calendars and actual letting dates too: ordinary bookkeeping software will not necessarily hold all the evidence the VOA needs.

Your MTD checklist for a Cornish holiday let

• Add up gross qualifying property and self-employment income for each relevant tax year.
• Check each owner's share and obtain advice before changing ownership or submitting Form 17.
• Confirm your MTD start date and whether any exemption applies.
• Choose compatible MTD software or a suitable spreadsheet and bridging arrangement.
• Reconcile booking-platform and letting-agent statements to your bank receipts.
• Record gross bookings separately from platform fees, cleaning, laundry, utilities and qualifying repairs.
• Keep availability calendars and actual letting records for the business rates tests.
• Diary 7 August, 7 November, 7 February and 7 May, plus your annual return and payment deadlines.
• Review the effect of FHL abolition and any forthcoming tax changes before making ownership decisions.
• Speak to your accountant promptly if you should already be using MTD but have not started.

Speak to a Cornwall holiday-let accountant

Whether you have one coastal cottage or several properties, the aim is the same: clear records, the right reporting and no last-minute scramble for booking statements.

Our family-run team in Helston can discuss landlord tax and MTD support, bookkeeping and tax returns and what help fits your circumstances. Book your free chat to talk through your holiday-let income and next steps.

Sources and further reading

• HMRC: check eligibility for MTD for Income Tax.
• HMRC: use MTD for Income Tax.
• HMRC: abolition of the furnished holiday lettings tax regime.
• HMRC: declare beneficial interests in joint property and income, Form 17.
• HMRC: property income tax rate changes from April 2027.
• GOV.UK: business rates on self-catering and holiday-let accommodation.
• Cornwall Council: second homes and the council tax premium.

This guide is general information, not personal tax advice. Reviewed on 10 October 2026. Tax treatment depends on ownership, income and individual circumstances. Speak to an adviser before changing your reporting or ownership arrangements.