%20--%3e%3cg%3e%3cg%20id='Logotype'%3e%3cg%3e%3cpath%20fill='%23141313'%20d='M46.37,250.9L136.63,28.98H0v237.25C0,296.87,21.93,318.83,52.56,318.83v-.03h160.64v-154.45l-156.9,95.23c-5.8,3.71-12.82-2.05-9.94-8.68Z'/%3e%3cpath%20fill='%23141313'%20d='M347.35,104.3c-68.33,0-115.93,44.71-115.93,108.91s47.6,108.9,115.93,108.9,115.93-44.72,115.93-108.9-47.6-108.91-115.93-108.91ZM347.35,255.04c-24.41,0-42.23-17.39-42.23-41.8s17.79-41.83,42.23-41.83,42.23,17.39,42.23,41.83-17.79,41.8-42.23,41.8Z'/%3e%3cpath%20fill='%23141313'%20d='M633.86,118.01c0,3.31-3.71,3.31-7.02,1.66-18.22-9.54-32.29-15.3-53-15.3-56.71,0-95.62,42.66-95.62,108.08s39.32,109.7,93.14,109.7v-.03c21.93,0,35.61-7.02,56.31-19.87,3.71-2.48,8.28-1.66,6.19,3.71l-5.36,12.85h86.51V28.98h-81.15v89.03ZM594.11,255.04c-24.41,0-42.23-17.39-42.23-41.8s17.79-41.83,42.23-41.83,42.23,17.39,42.23,41.83-17.79,41.8-42.23,41.8Z'/%3e%3cpath%20fill='%23141313'%20d='M1406.03,107.65l-23.58,112.61c-1.66,8.68-11.59,9.11-13.65-.4l-24.84-112.22h-94.79c-39.32,0-51.74-11.99-51.74-29.81s10.33-28.15,27.72-28.15c20.27,0,30.64,16.16,32.69,32.29h79.5C1325.35,29.38,1286.43,0,1230.52,0,1168.85,0,1130.32,36.04,1130.32,91.09v16.56h-44.71v67.07h44.71v144.08h81.15v-143.68h70.23l46.53,124.21c3.31,8.28,2.88,17.39-.4,26.1l-28.55,68.73h80.25l120.47-286.51h-93.97Z'/%3e%3cpath%20fill='%23141313'%20d='M886.41,117.98c0,3.31-3.71,3.31-7.02,1.66-19.87-9.94-34.35-15.3-54.65-15.3-60.45,0-93.97,49.29-93.97,107.65,0,64.59,37.26,98.54,87.77,98.54,23.19,0,40.57-7.02,62.1-19.47,5.37-3.31,9.51-.4,7.45,4.57-9.11,20.7-28.55,31.47-59.62,31.47h-83.2v67.07h98.5c72.04,0,123.78-47.63,123.78-114.67V107.65h-81.15v10.33ZM846.67,255.04c-24.41,0-42.23-17.39-42.23-41.8s17.79-41.83,42.23-41.83,42.23,17.39,42.23,41.83-17.79,41.8-42.23,41.8Z'/%3e%3cpath%20fill='%23141313'%20d='M1026.35,18.18c-26.1,0-44.71,16.16-44.71,39.35s18.61,39.35,44.71,39.35,44.72-16.16,44.72-39.35-18.62-39.35-44.72-39.35Z'/%3e%3crect%20fill='%23141313'%20x='985.78'%20y='107.65'%20width='81.15'%20height='211.15'/%3e%3c/g%3e%3c/g%3e%3c/g%3e%3c/svg%3e)
What are Business Rates (UK Holiday Lets)?
Business Rates, also known as non-domestic rates, are a property tax in the UK applied to properties used for business purposes. For a short-term rental to be classified as a self-catering property and valued for Business Rates, it must meet certain thresholds for availability and actual bookings per year.
These rules, which vary slightly between England, Wales, Scotland, and Northern Ireland, ensure that only properties operating as genuine businesses are moved from the domestic Council Tax system to the commercial Business Rates system.
Join the Lodgify newsletter
How it works
First, a property's eligibility is determined based on government-set letting thresholds. If a holiday let meets the criteria, it is assessed by the Valuation Office Agency (VOA) in England and Wales or a Scottish Assessor in Scotland.
The VOA assigns a 'rateable value' to the property, which is an estimate of its annual open market rent. The local council then uses this rateable value to calculate the final bill by multiplying it with a government-set 'multiplier.' Many small holiday lets may be eligible for Small Business Rate Relief, which can significantly reduce or even eliminate the final amount owed.
Why it matters
Understanding Business Rates is critical for UK holiday let owners for both legal compliance and financial planning. Paying the correct property tax avoids penalties and legal issues.
For many hosts, transitioning from Council Tax to Business Rates can be financially beneficial, as eligibility for Small Business Rate Relief can lead to a lower tax liability than the original Council Tax bill. Therefore, managing availability and bookings to meet or avoid the threshold is a key strategic decision.
Examples
- The owner of a yurt in Wales receives a letter from the Valuation Office Agency (VOA) confirming their property's rateable value. They use this figure and the current multiplier from their local council's website to forecast their tax liability for the next year.
- A new holiday let owner in Scotland is setting up their business and learns that from April 1, 2023, they must prove they meet the letting threshold before being assessed for Business Rates; previously, intent to let was sufficient.
- A host in Cornwall whose cottage was available for rent for 252 days and actually let for 105 days in the last year now needs to register for Business Rates instead of paying Council Tax.
- A property manager in the Lake District lists a new holiday let. After checking the rules, they find its rateable value is £11,000, which is below the £12,000 threshold, making them eligible to apply for 100% Small Business Rate Relief and pay no Business Rates.
Frequently asked questions
What is the difference between Business Rates and Council Tax for a holiday let?+
Can I get a discount on my Business Rates?+
Who decides if my property should pay Business Rates?+
What are the letting conditions to qualify for Business Rates in England?+
Related terms
Council Tax (UK)
Council Tax is a local tax on domestic properties in Great Britain (England, Scotland, and Wales) used to fund local authority services, with specific rules…
UK Furnished Holiday Lettings (FHL)
UK Furnished Holiday Lettings (FHL) is a specific tax regime in the United Kingdom that provides tax advantages to owners of short-term rental properties that…
Holiday Let
A holiday let is a furnished property rented out to tourists and travelers for short periods, typically ranging from a few nights to several weeks. This term…
UK Self Assessment Tax Return
The UK Self Assessment Tax Return is the system used by HM Revenue & Customs (HMRC) for individuals and certain business owners to report their income and…