Business Rates for Holiday Lets in 2026: What Property Owners Need to Know

Name: Makesworth Accountants
Price range: $$

The furnished holiday lettings (FHL) tax regime officially ended on 6 April 2025. While this change removed the need to count days for specific tax benefits, holiday let owners must still track availability and occupancy days to determine whether their property falls under business rates or council tax.

Understanding the difference is crucial—especially as many holiday lets qualify for Small Business Rate Relief (SBRR), which could reduce your bill to zero.

Business Rates vs Council Tax: What’s the Difference?

Both business rates and council tax help fund local services. However:

Council tax applies to residential properties.
Business rates apply to properties used for commercial purposes—including holiday lets.

If your property meets certain letting conditions, it will be assessed for business rates instead of council tax.

When Does a Holiday Let Qualify for Business Rates?

The rules vary depending on location. In England, your holiday let must meet both of the following conditions within a 12-month period:

Be available for short-term letting for at least 140 days
Be actually let for at least 70 days

Important Day-Counting Rules

When calculating qualifying days:

Only short-term lets (28 days or less) count.
Stays longer than 28 days are ignored.
Nights used privately by family or friends (free or discounted) do not count.
Days when the property is unavailable due to repairs are excluded.
Future bookings are not counted until they occur.

If these conditions are not met, your property will be liable for council tax instead of business rates.

How Holiday Lets Are Valued for Business Rates

The valuation method depends on how many properties you operate:

Single properties or complexes with up to four units are valued based on bed space.
Five or more properties are valued as a percentage of fair maintainable trade.

New rateable values will take effect from 1 April 2026, so property owners should review their position in advance.

Small Business Rate Relief (SBRR)

Holiday lets with a rateable value of £15,000 or less may qualify for Small Business Rate Relief:

£12,000 or less – 100% relief (no business rates to pay)
£12,001 to £15,000 – Relief reduces gradually from 100% to 0%
Above £15,000 – No SBRR available

For many holiday let owners, this relief significantly reduces operating costs.

New Multiplier for Retail, Hospitality & Leisure (From April 2026)

If your property does not qualify for Small Business Rate Relief, business rates are calculated using a multiplier.

From April 2026, a new lower multiplier will apply to businesses in the Retail, Hospitality and Leisure (RHL) sector, replacing previous relief schemes.

The RHL multipliers will be:

43p for rateable values between £51,000 and £500,000
38.2p for rateable values below £51,000

This change aims to provide ongoing support for hospitality-based businesses, including eligible holiday lets.

Transitional Relief After the 2026 Revaluation

The 2026 revaluation may increase rateable values for some properties. To ease the impact:

Transitional relief will limit how much business rates can increase following revaluation.
Supporting small business relief may apply where rateable values rise and businesses lose eligibility for:
- Small Business Rate Relief
- Rural Rate Relief
- Retail, Hospitality & Leisure relief
- 2023 Supporting Small Business Relief

Property owners should assess their exposure early to avoid unexpected increases.

Final Thoughts for Holiday Let Owners

Although the furnished holiday lettings tax regime has ended, business rate rules remain highly relevant. By carefully monitoring availability days and understanding the 2026 changes, holiday let owners can: