If you let out a holiday home, you might be wondering whether you should be paying council tax—or if you’re eligible to pay business rates instead.
For many landlords, switching to business rates can result in lower costs—and in some cases, no bill at all thanks to small business rate relief.
Here’s what you need to know about the rules in England and Wales, and how to make sure you’re paying the right amount.
Business Rates vs Council Tax
Holiday lets are treated differently depending on how often they’re available to rent and actually rented out. If you meet the criteria, you could move from paying council tax to paying business rates—and possibly claim relief on top.
Let’s break it down by region.
Holiday Let Rules in England
To qualify for business rates in England, your property must have been:
- Available to let commercially for at least 140 nights in the last 12 months, and
- Actually let for at least 70 nights during that same period
If your property meets these criteria, it can be classified as a self-catering property and assessed for business rates instead of council tax.
Small Business Rate Relief
If you only let one property and it has a rateable value of £15,000 or less, you may be eligible for small business rate relief. This is based on your property’s size, location, and expected rental income—usually tied to the number of bedrooms.
Here’s how it works:
- Rateable value up to £12,000 – no business rates to pay
- Rateable value between £12,001 and £15,000 – tapered relief from 100% down to 0%
If you own more than one holiday let, the relief can still apply for 12 months after you acquire the second property. After that, relief remains available if:
- None of the additional properties has a rateable value over £2,899, and
- The total rateable value is less than £20,000 (or £28,000 if you’re in London)
Check your business rates bill carefully, and if relief hasn’t been applied, contact your local council to claim it.
Holiday Let Rules in Wales
In Wales, the rules are stricter.
To qualify for business rates, your property must have been:
- Available to let commercially for 252 nights in the last 12 months, and
- Actually let for at least 182 nights
These tougher thresholds mean fewer Welsh holiday lets qualify, so be sure your records back up your claim if you intend to switch.
What About Scotland and Northern Ireland?
The rules in Scotland and Northern Ireland are different again and not covered in this guide. If you have property there, it’s best to check the latest guidance for each nation or speak to your accountant.
Keep Accurate Records
Even though landlords no longer need to keep detailed records of availability and lettings for tax purposes, you still need them for business rates eligibility.
That’s especially important if you want to claim relief or show your property meets the required thresholds. Fortunately, the English business rates test is now less strict than the old furnished holiday lettings regime, so you’ve got more flexibility with longer off-season lets.
Not Sure If You Qualify?
Working out whether your holiday let should be on business rates or council tax can be tricky, especially with different rules across the UK.
If you’re unsure or want to make sure you’re not overpaying, get in touch with Jon Davies Accountants. We’ll review your situation, check for reliefs you might be missing, and help you stay compliant.
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Any questions?
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