Answers · UK 2025/26

Does my holiday let pay business rates or council tax?

A self-catering holiday let in England is assessed for business rates rather than council tax only if it is available to let for at least 140 days a year and actually let for at least 70 days a year, with properties failing to meet the actual-letting test moved onto council tax instead, potentially at the higher long-term empty homes premium rate if unoccupied.

Last updated: 1 July 2026Last reviewed: 1 July 2026How we verify

Full answer

Whether a holiday let is charged business rates or council tax has been tightened significantly in recent years, and getting it wrong can leave an owner facing an unexpectedly large council tax bill, including empty homes premiums in some cases. **The current test in England** Since changes tightening the rules on self-catering properties, a holiday let in England must meet two separate conditions to be assessed for business rates: it must be available for letting to the public as self-catering accommodation for at least 140 days in the coming year, AND it must actually have been let for at least 70 days in the previous 12 months -- meeting only the availability test without the actual-letting test is no longer sufficient. **Why the actual-letting test was introduced** Before this change, some owners of what were effectively second homes registered them as available for holiday letting to qualify for business rates (which often meant no bill at all thanks to small business rates relief), without genuinely letting the property out commercially -- the actual-letting requirement was introduced specifically to stop this practice and ensure only genuinely operating holiday lets get business rates treatment. **Worked example** An owner advertises a coastal cottage as available for holiday letting all year (365 days, comfortably meeting the 140-day availability test), but due to low demand it is only actually booked and let for 40 nights over the year, falling short of the 70-day actual-letting requirement. As a result, the property is assessed for council tax rather than business rates -- and because it may also count as a second home or, if genuinely unoccupied for extended periods, could additionally attract a council tax empty homes premium, the owner's bill can end up considerably higher than expected. **Business rates and small business rates relief** Where a holiday let genuinely qualifies for business rates, many smaller holiday lets can then also benefit from small business rates relief, which can reduce or even eliminate the rates bill entirely depending on the rateable value -- this combination is one of the main financial attractions of qualifying for business rates treatment in the first place. **Council tax premiums for second homes and long-term empty properties** Properties that fail the business rates test and are treated as council tax second homes can, depending on the local council's policy, be charged a second homes council tax premium (an extra percentage on top of the standard council tax bill), and properties left genuinely empty and unfurnished for extended periods can additionally face escalating long-term empty homes premiums -- both of which can make failing the business rates test considerably more expensive than owners might expect. **How local councils check compliance** Local councils and the Valuation Office Agency have been increasing scrutiny of self-catering property claims, sometimes requesting evidence of actual bookings (such as booking platform records or accounts showing letting income) to confirm the 70-day actual-letting requirement is genuinely met, rather than simply accepting a property owner's declaration that it is available for holiday letting. **Practical tip** If you own a holiday let, keep clear records of actual bookings and letting income throughout the year to evidence meeting the 70-day actual-letting test, since falling short can move the property onto council tax (potentially including a second homes or empty homes premium) rather than the often more favourable business rates treatment.