Business Rates

If you are based in the UK, you should know all about business rates.

If your property is available for short-term lettings for more than 140 days in any given year and let for a minimum of 70 days, it will be subject to business rates property tax rather than council tax. What’s more, most properties will be able to claim small business rates relief, which is often up to 100% of the bill depending on the rateable value of the property.

The rateable value of a property depends on several factors, including its size and location. Provided the rateable value is less than £15,000 (and it is likely most smaller properties will be) you will be able to apply for small business rates relief. If you operate just one holiday rental in the local authority, this is likely to mean there will be no business rates to pay.

The moment you buy a property, the local authority sends you a letter asking to confirm your personal details in relation to council tax. This offers the perfect opportunity to contact the local authority and inform them of your intention to run the property as a holiday let. The local authority will then ask for basic information, including the number of bedrooms, the address, and size of the property. You will also be asked to confirm the number of days it will be available to let per year. The local authority will also ask to see proof of the listing – on Airbnb or a similar platform. Once you have provided all the necessary information, the local authority will calculate your business rates and send you a bill. It is likely you will be asked to pay council tax while the process of switching to business rates is ongoing. The council tax will be reimbursed if the rateable value means there is no business rates bill to pay.

You should also check the latest rules in relation to council tax and business rates based on your local area. For example, in Wales, from 1 April 2023, properties need to be available to let for at least 252 days and be rented for at least 182 days in any 12-month period. Properties that do not meet the new threshold could face a council tax second homes premium – with some local authorities charging up to 150%. As ever, it is important to conduct research and due diligence – particularly as legislation is changing all the time.