Holiday Lets: Council Tax or Business Rates?

If you own a holiday let in the UK, one of the key questions you’ll face is whether your property falls under council tax or business rates. The answer depends on how often the property is rented out—and understanding the rules can make a big difference to your bottom line.

In some cases, landlords can qualify for Small Business Rate Relief (SBRR) and pay little to no business rates at all. Let’s look at how the rules apply across England and Wales.

Holiday Lets in England

In England, a holiday let is treated as a self-catering property if it is:

• Available for at least 140 nights a year

• Actually let for at least 70 nights a year

If your property meets these conditions, it will be valued for business rates based on its rateable value (often linked to the number of bedrooms).

Small Business Rate Relief (England)

• Under £12,000 → No business rates (if it’s your only property).

• £12,001 – £15,000 → Partial relief, gradually reduced.

• Over £15,000 → No relief.

For 2025/26, the small business multiplier is:

• 49.9p per £1 of rateable value (outside London)

• 51.9p per £1 of rateable value (in London)

Important: Relief is not automatic. Landlords must apply via their local council once the property is registered for business rates with the Valuation Office Agency (VOA).

Example:

• Devon cottage, rateable value £9,000 → Meets letting test → Eligible for 100% relief, so no business rates.

Second Properties in England

Owning more than one holiday let doesn’t necessarily rule you out of relief.

• Relief continues on your main property for 12 months.

• After that, you can still qualify if:

  • No other property has a rateable value above £2,899, and

  • Combined rateable value is below £20,000 (£28,000 in London).

Holiday Lets in Wales

The thresholds in Wales are stricter than in England. To count as a business property, your holiday let must be:

• Available for at least 252 nights a year

• Actually let for at least 182 nights a year

Small Business Rate Relief (Wales)

• £6,000 or less → 100% relief.

• £6,001 – £12,000 → Tapered relief.

• Over £12,000 → No relief.

Unlike England, SBRR in Wales is given automatically, but only for two properties per local authority.

Key Takeaway

The type of tax your holiday let pays depends on its location and letting profile.

• In England, the rules are more flexible, and small business rate relief can significantly reduce costs.

• In Wales, stricter thresholds mean fewer properties qualify—but those that do may benefit from automatic relief.

If you own a holiday let, it’s worth reviewing whether your property should be under council tax or business rates. Getting it right could save you thousands each year.

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