Although the end of the tax regime for furnished holiday lettings relieved landlords of the need to keep track of the number of days for which the holiday let was available for letting and actually let, some day counting is still needed for business rate purposes. Depending on the lettings profile, the landlord may be eligible for business rates rather than council tax, and this may be very advantageous. The tests that need to be met depend on whether the property is in England or in Wales. Different rules apply in Scotland and Northern Ireland.

Holiday lets in England

A holiday let is treated as a self-catering property and valued for business rates if the property was available to let for at least 140 nights and was actually let for at least 70 nights in the year.

If the rateable value of the property is less than £15,000, the landlord may be able to benefit from small business rate relief.

For holiday lets, the rateable value is determined by the number of bedrooms. If the rateable value is less than £12,000, the landlord does not have to pay any business rates as long as the holiday let is their only business property. Where the rateable value is between £12,000 and £15,000, the rate of relief reduces gradually from 100% to zero.

For 2025/26, the small business multiplier is 49.9p per pound of rateable value outside London and 51.9p in London.

If the landlord is currently paying council tax, they will need to complete the relevant Valuation Office Agency form to apply for business rates. Landlords wishing to claim small business rate relief should write to their local council; the relief is not given automatically.

Example 1

A landlord lets a holiday cottage on the Devon coast. The cottage is available to let for more than 140 nights in the tax year and actually let for more than 70 nights. The rateable value is £9,000. The property is within business rates and, as 100% relief applies, there are no business rates to pay.

Example 2

A landlord has a holiday let on the Suffolk coast which is available for letting all year round and actually let for more than 70 nights each year. The rateable value is £13,500.

The landlord is within business rates. Before relief, the business rates for 2025/26 are £6,736.50. The landlord benefits from 50% relief so pays £3,368.25.

Second properties

If a landlord acquires a second business property, they will continue getting any relief on their main property for 12 months. Thereafter, they can continue to benefit from small business rate relief if none of the other properties have a rateable value of more than £2,899 and the total rateable value of all business properties is less than £20,000 (£28,000 in London).

Properties in Wales

Harsher tests apply to fall within business rates in Wales. The property must be available for letting for at least 252 nights and actually let for at least 182 nights.

Small business rate relief is available where the rateable value is less than £12,000. However, the rules are less generous than in England. Full relief (100%) is only available where the rateable value is £6,000 or less. The relief reduces from 100% to zero as the rateable value increases from £6,000 to £12,000.

Small business rate relief is limited to two properties in each local authority. In Wales, the relief is given automatically.