Some owners of holiday homes pay no council tax or business rates for their property, as they register the property as business premises then claim small business rates relief (SBRR) to reduce the business rates bill to nil.
An assessment for business rates will always take priority over council tax, but it is normally more costly to pay business rates if SBRR is not available.
An English local authority should only re-categorise a residential let property as a business premises if it is let on a commercial basis – ie. it is available for short-term lettings for at least 140 days per year. There are slightly different rules in Wales and Scotland.
From April 2023, for the property to qualify for SBRR, the landlord will have to provide evidence that the property will be offered for short-term commercial letting for at least 140 days in the current year. This evidence may be in the form of bookings, receipts or adverts.
In addition, the landlord will have to show that in the previous tax year the property was:
• available for short-term commercial letting for at least 140 days; and
• actually let for short-term letting for at least 70 days.
If you let holiday accommodation, your property will need to meet these conditions for the year starting 6 April 2022.