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Holiday lets – Business rates or council tax?

May 5, 2025

Landlords letting holiday accommodation may be able to pay business rates rather than council tax on their property. This will generally be cheaper, and if they qualify for small business rate relief, depending on the value of the property, they may not have anything to pay.

Properties in England

A property will be treated as a self-catering property for business rates purposes if, in the previous 12 months, it was available to let commercially for short periods for at least 140 nights and was actually let for 70 nights.

Where the landlord only lets one property in England and its rateable value is £15,000 or less, the landlord may be eligible for small business rate relief. The rateable value is determined by reference to its size and location and how much income the landlord is likely to make. This is normally based on the number of bedrooms.

If the rateable value is £12,000 or less, the landlord will not pay any business rates. Where the rateable value is between £12,001 and £15,000, the rate of relief gradually reduces from 100% to 0%.

Where a landlord has more than one property, the relief remains available for 12 months after the date on which the second property was acquired. Thereafter, small business relief remains available if none of the other properties have a rateable value in excess of £2,899 and the total rateable value of all the properties is less than £20,000 (or £28,000 in London).

Landlords should check their bills and contact their local council to claim the relief if it has not been given.

Properties in Wales

Stricter tests apply to access business rates in Wales and to qualify the property must have been available for letting commercially for short periods for at least 252 nights in the last 12 months and actually let for at least 182 nights.

Different rules apply to properties in Scotland and Northern Ireland.

Keep records

Although landlords no longer need to keep records of the number of nights on which the property was available for letting and actually let for tax purposes, they still need to maintain records for business rates purposes. However, for properties in England, the business rates test is less stringent than that which applied under the former FHL regime, allowing the landlord the option of longer lets in the off-season without jeopardising access to business rates relief.

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