If you let out a holiday property, you might be wondering whether you should be paying business rates or council tax — and what the difference means for your bottom line.
The furnished holiday lettings (FHL) tax regime is being phased out, which means some landlords no longer need to track every letting day for tax purposes. But if you want to qualify for business rates, you’ll still need to count the days — and the rules vary depending on where your property is.
Let’s break it all down and see how much you could save.
Business Rates vs Council Tax: Why It Matters
In some cases, switching to business rates instead of paying council tax can result in a much lower bill — especially if you qualify for Small Business Rate Relief.
But to make the switch, your property must meet certain conditions, and those vary depending on whether the property is in England or Wales.
(Scotland and Northern Ireland have their own rules.)
Holiday Lets in England: The Rules
To be assessed for business rates instead of council tax, your property must be:
- Available to let for at least 140 nights per year, and
- Actually let for at least 70 nights per year
If you meet these two tests, your holiday let is considered a self-catering property, and the Valuation Office Agency (VOA) will assign it a rateable value based on the number of bedrooms.
How Small Business Rate Relief Works (England)
- Rateable value under £12,000
100% relief = no business rates to pay - Rateable value between £12,000 and £15,000
Relief tapers down from 100% to 0% - Rateable value over £15,000
No relief, full business rates apply
For 2025/26, the small business multiplier is:
- 9p per £1 of rateable value outside London
- 9p per £1 in London
Action required:
If you’re currently paying council tax, you’ll need to apply to the VOA to switch to business rates. Then contact your local council to claim Small Business Rate Relief — it’s not automatic in England.
Examples (England)
Example 1 – Devon cottage
- Available: 140+ nights
- Let: 70+ nights
- Rateable value: £9,000
Qualifies for business rates, and gets 100% relief
No business rates to pay
Example 2 – Suffolk property
- Available: All year
- Let: 70+ nights
- Rateable value: £13,500
Business rates for 2025/26 = £6,736.50
With 50% relief, only £3,368.25 is payable
Second Business Properties
Thinking of investing in another holiday let?
If you already get Small Business Rate Relief, you can keep it on your main property for 12 months after acquiring a second one.
Beyond that, you may still get relief if:
- None of your additional properties have a rateable value above £2,899, and
- The total value of all properties stays below £20,000 (or £28,000 in London)
Holiday Lets in Wales: The Tougher Tests
The Welsh Government introduced stricter criteria for holiday lets to qualify for business rates.
To be eligible, the property must be:
- Available for at least 252 nights per year, and
- Actually let for at least 182 nights
If you don’t meet both, you’ll stay on council tax — and possibly face a council tax premium of up to 300% in some areas!
Rate Relief in Wales
Small Business Rate Relief applies automatically in Wales (no need to apply), but it’s less generous than in England.
- Rateable value up to £6,000
100% relief - £6,001 to £12,000
Relief gradually reduces - Over £12,000
No relief
Relief is limited to two properties per local authority.
How to Apply for Business Rates
- England:
- Submit the relevant form to the Valuation Office Agency (VOA)
- Contact your local council to apply for relief
- Wales:
Relief is automatic, but you must still meet the tougher occupancy tests
Need Help Navigating Business Rates for Your Holiday Let?
Switching from council tax to business rates can mean big savings — but only if you meet the criteria. Whether you’re letting a coastal cottage, a countryside cabin, or a city apartment, we’ll help you:
- Track your days and stay compliant
- Understand rateable values and relief
- Maximise the profitability of your holiday let
Want to check if you qualify? Jon and the team are here to help.
Get in touch today and let’s make sure you’re not leaving money on the table.
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Any questions?
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- You can ring us on 0151 380 8080
- You can email us at gr****@*********************co.uk