Business rates

If you let out a furnished property in England as a holiday home you'll know that it's subject to business rates rather than council tax. While these can be more costly, most holiday homes qualify for small business rates relief (SBRR) which reduces the rates below the amount of council tax payable if it applied. It seems that some second homeowners have been abusing this council tax break.

What's the intention?

The current rules allow homeowners to register for business rates and then claim SBRR if they "intend" to let their property as a holiday home, whether or not it's actually let as such. From April 2023 the rules will be tightened so that business rates will only apply where the property:

• will be available for short-term lets as self-catering accommodation for at least 140 days per year in the previous year and the one ahead; and
• in the previous year, the property was actually let as short-term self-catering accommodation for at least 70 days.

Local authorities will be able to ask for evidence to prove that the conditions above are met.

From April 2023 a property will only be liable to business rates and so potentially qualify for small business rates relief if it's available and actually let as holiday accommodation for a minimum number of days. Clients need to have evidence of this starting from April 2022.

This is different to HMRC’s conditions as to what qualifies as a furnished holiday let for income tax purposes so the two are not to be confused.