Do holiday lets pay business rates or council tax in the UK?

Full answer

Whether a holiday let pays business rates or council tax depends on how genuinely it is used as a commercial let, and it matters to owners because business rates can be far cheaper - often zero - than council tax on a second home. In England, a self-catering property moves onto the business rates list only if it meets availability and actual-letting day thresholds set by the Valuation Office Agency: broadly it must be available to let for a set minimum number of days a year and actually let for a lower minimum number. (Wales applies its own, stricter day thresholds, and Scotland has separate rules.) These exact day counts and the rateable values are set by the VOA, not fixed figures, so check the current criteria on GOV.UK rather than assuming. The big advantage is Small Business Rate Relief: where a property has a low rateable value and the owner has few other commercial properties, relief can reduce the bill to nil, though the precise rateable value thresholds vary and should be confirmed with your local council. If a holiday let does not meet the letting tests, it remains in council tax, and many councils now levy a second-homes premium on top of the standard band charge - another reason owners try to qualify for business rates. A 2026/27 planning point: the day-count tests are checked over a rolling period, so a property let too infrequently can be moved back into council tax, potentially with the premium. Owners should keep booking records to evidence the actual letting days. Note the tax treatment of the rental profit changed separately - the former furnished holiday let income tax advantages have been withdrawn, so profits are now taxed like other property income. Use the council tax calculator below to compare, and check business rates eligibility with your local authority and the VOA.

Try the calculator