Should You Pay Business Rates or Council Tax on Your Holiday Let?

Understanding the Basics

If you’re a landlord letting out holiday accommodation, you may have the option to pay business rates instead of council tax. This can often result in lower costs, especially if you’re eligible for small business rate relief. In some cases, it may even mean paying nothing at all.

When Do Holiday Lets Qualify for Business Rates?

In England, a property qualifies for business rates (as a self-catering property) if, during the previous 12 months:

• It was available for commercial short-term lets for at least 140 nights, and
• It was left for at least 70 nights.

Once these criteria are met, the property’s rateable value—determined by its size, location, and potential income (often based on the number of bedrooms)—will influence what, if anything, you need to pay.

Small Business Rate Relief Explained

If you let only one property in England, the following applies:

• Rateable value ≤ £12,000: You pay no business rates.
• Rateable value between £12,001 and £15,000: Relief is tapered from 100% down to 0%.

If you own multiple properties, you’re still eligible for relief for 12 months after acquiring a second one. After that:

• None of your other properties can have a rateable value over £2,899.
• The combined rateable value must stay under £20,000 (£28,000 in London).

To benefit, always check your bill and contact your local council to ensure the relief is applied.

Stricter Rules in Wales

In Wales, the eligibility tests for business rates are more demanding:

• Property must be available for short-term commercial letting for at least 252 nights, and
• Must have been let for at least 182 nights in the past year.

Failing to meet these thresholds means paying council tax instead.

Note: Scotland and Northern Ireland have their own distinct rules, so landlords in these areas should consult local guidance.

Don’t Forget to Keep Records

While landlords are no longer required to keep records of letting activity for tax purposes under the old furnished holiday let (FHL) regime, they must keep clear documentation for business rates. This includes tracking how many nights the property was both available and let.

Fortunately, the criteria in England are less strict than those in the former FHL regime. This gives landlords more flexibility, especially during off-seasons, without losing eligibility for business rate relief.

Final Thoughts

Switching from council tax to business rates for a qualifying holiday let can result in substantial savings. Understanding and meeting the relevant criteria—and keeping accurate records—is key to ensuring you receive any applicable relief.

Additional Resource:
Government Guide: Business Rates for Self-Catering and Holiday Let Accommodation

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