Holiday lets and business rates

The abolition of the furnished holiday lettings regime abolished day counting for tax purposes from 6 April 2025 onwards. However, where a property is let as a holiday let, there is still a need to count the days on which the property is available for letting and actually let to check that the property is within business rates rather than council tax. As many holiday lets will be eligible for small business rate relief, this is a definite bonus, as there will be nothing to pay.

Business rates, like council tax, are paid to help fund local services. Business rates rather than council tax are paid on properties that are used commercially, which includes holiday lets.

The business rates system depends on where the holiday let is located. In England, a holiday let will be within business rates if it is available for short-term letting for at least 140 days and actually let for at least 70 days in a 12-month period. When counting the days, no account is taken of nights when the property is used privately by family or friends free or at a discounted rate, nights where the property is unavailable as it is under repair or future bookings which have yet to happen. Short-term lets are lets of 28 days or less. Stays of more than 28 days are disregarded.

Where these tests are not met, council tax will be payable instead.

Valuation

Single properties and complexes of up to four properties are valued by bed space. Complexes with five or more properties are valued as a percentage of the fair maintainable trade.

New valuations apply from 1 April 2026.

Small business rate relief

Small business rate relief applies where the rateable value of the property is £15,000 or less. Properties with a rateable value of £12,000 or less pay no business rates. Where the rateable value is between £12,001 and £15,000, the rate of relief reduces gradually from 100% to nil.

Multiplier – retail, hospitality and leisure

Where small business rate relief is not available, the business rates that are payable are calculated using the relevant multiplier. From April 2026, a new lower multiplier is introduced for businesses in the retail, hospitality and leisure (RHL) sector. The lower multiplier replaces the relief previously available to this sector. The RHL multiplier is set at 43p where the rateable value is £51,000 or more and less than £500,000 and 38.2p if the rateable value is below £51,000.

Transitional reliefs

Following the 2026 revaluation, transitional relief is available to limit the amount by which business rates can increase as a result of the revaluation. In addition, supporting small business relief is available where the rateable value increases as a result of the 2026 revaluation and the business has lost some of its small business rate relief, rural rate relief, RHL relief or 2023 supporting small business relief.

Partner note: www.gov.uk/introduction-to-business-rates/self-catering-and-holiday-let-accommodation

Disclaimer

This article is not intended to be tax advice. Each person's tax circumstances are different; therefore, we recommend that you contact us for personalized tax advice. Sam Niranjan & Co., or Sivasambu Candesamy Niranjan, will not accept any responsibility whatsoever if you make any loss as a result of relying on this article.