Business rates for holiday lets: key facts
- In England a self-catering holiday let is assessed for business rates if it was available to let commercially for at least 140 nights and actually let for at least 70 nights in the last 12 months, and you plan to make it available for 140 nights in the next 12 months.
- In Wales the tests are 252 nights available and 182 nights actually let. Since 1 April 2026 Welsh owners can average the nights let over two or three years, and count up to 14 nights a year donated to a registered charity.
- Only stays of 28 nights or less count as letting nights. Your own use, cheap stays for family and friends, nights closed for refurbishment and future bookings don't count.
- Since 24 July 2026 in England, the past-year letting test doesn't apply where a site has five or more self-catering units, or where the let shares land with another business run by the same owner, such as a pub with a cottage.
- The VOA values single lets and groups of up to four by a figure per single bed space, adjusted for location and quality. Complexes of five or more are valued at 11%, 13.5% or 16% of fair maintainable trade, depending on their facilities.
- If you let only one property in England and its rateable value is less than £15,000, you may get small business rate relief; at £12,000 or less there is nothing to pay. The VOA's own manual says most self-catering properties fall under small business rate relief.
- Holiday lets count as retail, hospitality and leisure (RHL) properties in England, so in 2026/27 they pay 38.2p below £51,000 rateable value rather than 43.2p.
- You can check and challenge your holiday let's valuation free yourself via a business rates valuation account, or a rating surveyor can do it for you.
Does a holiday let pay business rates or council tax?
A furnished holiday let pays council tax unless it meets the self-catering letting test, in which case it moves into the business rates list instead. It is never both for the same nights: the test decides which list the property belongs in.
The rule sits in section 66 of the Local Government Finance Act 1988, which decides what counts as "domestic" property. A house or flat is domestic by default. It becomes non-domestic (and so rateable) only when it is self-catering accommodation let commercially for short periods and the letting test is met. The VOA's guidance is clear that second homes let only occasionally stay in council tax.
The tests were tightened from 1 April 2023 to stop properties that are mainly empty or used as second homes moving to business rates simply by being advertised. Since then, the VOA expects the letting to be real: in its words, "let commercially" means let with the intention of making a profit, usually at market rates and actively advertised, for example on holiday cottage websites, through agents or on tourist pages.
| England | Wales | |
|---|---|---|
| Available to let commercially in the last 12 months | 140 nights or more | 252 nights or more |
| Actually let commercially in the same 12 months | 70 nights or more | 182 nights or more |
| Intention for the next 12 months | Available for 140 nights or more | Available for 252 nights or more |
| Length of each stay that counts | 28 nights or less | 28 nights or less |
Two further points catch people out:
- Someone's main home is always domestic. If anyone lives in the property as their sole or main residence, it is council tax for that time, whatever the bookings say.
- New lets start in council tax. The VOA says a new self-catering property stays in council tax until it has met the test. You then apply to the VOA, and it can be moved into the rating list from the date it first qualified.
Hostels and holiday flatlets that aren't self-contained follow a different rule: they can be rateable simply because they are used in the course of a business for short-stay accommodation. Bed and breakfasts are covered in our hotels and guest houses guide.
Which nights count towards the 140 and 70 (or 252 and 182)?
Only nights the property was genuinely available or let commercially, for stays of 28 nights or less, count. A night counts as let if guests were there just before midnight, so a Friday evening to Sunday morning stay is two nights. Your own use, discounted stays for family and friends, closures and future bookings don't count.
GOV.UK sets out the nights you can't include, in both England and Wales:
- nights the property was closed for repair or refurbishment;
- nights the site it is on was closed (common on holiday parks with a closed season);
- nights you used it yourself, including letting it to friends or family at a discounted rate;
- future bookings that haven't happened yet.
Long stays: a stay of more than 28 nights doesn't count towards the 70 (or 182) let nights. Those nights can still count towards the 140 (or 252) available nights, but only if the property could have been booked for 28 nights or less over that period.
Wales: averaging and charity nights
Wales has two ways to help a let that falls short of 182 nights in one year:
- Averaging across properties: if you let several holiday properties in the same location or very close together as one business, you can average the nights let across them. Each property can only be used in one averaging calculation.
- Averaging across years: from 1 April 2026, you can use the average number of nights let over the previous 24 or 36 months. The average must still be at least 182 nights per 12 months.
Also from 1 April 2026, up to 14 nights a year where you lend the property free to a registered charity for its beneficiaries can count towards both the 252 and the 182. Nights donated before 1 April 2026 don't count. Explain any averaging or charity nights in the "further information or remarks" section of the Welsh application form.
England: five or more units, or a let alongside another business
From 24 July 2026 England dropped the past-year availability and letting conditions in two cases, leaving only the forward-looking test of being available for 140 days in the next 12 months:
- a property that contains five or more self-catering lets, none of them anyone's main home; and
- a self-catering let that shares land with a business used for a different purpose, run by the same person or business. GOV.UK's example is a pub and a cottage that share land.
England has no averaging rule: since 2023 each property has had to pass the 70-night test on its own.
What happens if a holiday let fails the letting test?
It is moved from the business rates list to council tax. Once you are paying business rates the VOA sends a form each year to confirm the property still qualifies; if it doesn't, or you don't return the form, it goes into the council tax list and the council bills you for council tax.
The VOA checks self-catering properties on a rolling basis using its own "request for information" forms. Those forms are legal documents: the VOA says you can face a financial penalty if you don't return them in time, your property can be moved to council tax, and including false information can have serious consequences, including prosecution.
Moving to council tax matters because the bill can look very different:
- Business rates: a single cottage with a low rateable value may get small business rate relief and pay little or nothing.
- Council tax: a furnished property that isn't anyone's main home is treated as a second home. GOV.UK says councils in England can charge up to 2 times the normal council tax on second homes. There are exceptions, for example where planning conditions stop the property being used as a permanent home. Ask your council how it treats second homes, and in Wales check your council's own policy.
Choosing to stay below the test
Some owners deliberately limit bookings so the property stays in council tax. A Lands Tribunal case, Godfrey v Simm (VO), decided that availability depends on the period the owner actually intends to accept bookings, not on what an advert says. The VOA expects evidence of a conscious decision to limit bookings, such as advertising material and proof of turning bookings down, before it agrees a property shouldn't be rated.
How does the VOA work out a holiday let's rateable value?
Very few holiday lets are rented on the open market, so the VOA works from trading accounts. Single lets and groups of up to four are valued at a figure per single bed space, set by the location category and quality category. Complexes of five or more are valued as a percentage of fair maintainable trade: 11%, 13.5% or 16% depending on their facilities.
A rateable value is meant to be a yearly rent at 1 April 2024. Because holiday cottages are almost never let to a business tenant on a lease, the VOA builds its scales from a cross-section of income and expenditure accounts of commercially run lets. That is why it may send you form VO 6048, asking for rent, gross receipts and tariffs. GOV.UK says the information is used to calculate your rateable value, and that the forms should be returned within 56 days.
Single lets and groups of up to four
The VOA analyses net profit, sets aside a fair income for the operator, and treats the remainder as the rent. It then divides that by the number of single bed spaces (SBS) to get a value per bed space. Its 2026 practice note sorts lets on two scales:
| Location category | What the VOA means |
|---|---|
| 1: prime | Highly sought-after "hot spot"; very high tariffs and occupancy, even off-peak |
| 2: good | Where most lets are; good amenities, low vacancy in peak season |
| 3 | Further from attractions and amenities; lower tariffs, slightly harder to let |
| 4 | Few self-catering properties; difficult to let, low tariffs and few lets |
| Quality category | What the VOA means |
|---|---|
| A | High quality, well above average: may be detached, with parking, extra bathrooms or reception rooms, very well kept gardens |
| B | Standard, and where most lets sit: central heating, double glazing, reasonable kitchen and bathroom |
| C | Basic, below standard: little investment, small rooms, lacking standard facilities. Very few properties |
The VOA says the standard let in most areas has four to six single bed spaces. Where it has little evidence for your property, it compares it with a similar property with the same number of bed spaces.
How bed spaces are counted
- A double or twin room counts as 2; a single room as 1.
- A bunk bed in a single-size room counts as 1.
- Bunks squeezed into a double room to make a "family room" are ignored, as are put-you-ups.
- In a studio with no separate bedroom, a bed-settee in the living area counts as 1.
Complexes of five or more
Larger complexes are valued as a percentage of fair maintainable trade (FMT): the gross receipts a reasonably efficient operator could expect, taken before any agency commission. Location isn't scored separately because it already shows in the trade. Quality decides the percentage:
| Category | Typical features | Percentage of FMT |
|---|---|---|
| A | Very good facilities, such as swimming pools, tennis courts, games rooms, saunas, hot tubs, animal petting | 11% |
| B | Average quality, few facilities (the default, and most complexes) | 13.5% |
| C | Basic quality, no facilities | 16% |
The better-equipped complexes get the lower percentage because pools and leisure facilities cost more to run. A made-up illustration: a Category B complex with fair maintainable trade of £180,000 would have a rateable value of about £24,300 (£180,000 × 13.5%).
The VOA also warns its valuers not to use one owner's receipts in isolation, because one owner may simply market harder, or include more non-rateable extras, than a neighbour with a similar property. That cuts both ways when you look at your own valuation.
Can a holiday let get small business rate relief?
Yes. In England, if you let only one property and its rateable value is less than £15,000, you may get small business rate relief, with nothing to pay at £12,000 or less. In Wales, small business rates relief is full up to £6,000 and tapers to nothing at £12,000, for up to two properties per business in each council area.
The VOA's own Rating Manual notes that the majority of self-catering properties fall under small business rates relief, which is why business rates can work out cheaper than council tax for a single let. The relief is given by the council, not the VOA; GOV.UK says to contact your council to check eligibility. See our small business rate relief guide for the full rules.
The multiple-lets problem in England
England's relief is designed for a ratepayer with one property. If you own a second let that is valued separately, you can usually keep relief on the first for a limited time (12 months if the second was taken on before 27 November 2025, 36 months if on or after that date). After that, you can keep relief only if none of your other properties has a rateable value above £2,899 and the total of all your properties is under £20,000 (£28,000 in London). Most holiday cottages are worth more than £2,899, so owning two separately valued lets typically means losing the relief on both.
Whether several units on one site are one property or several is a valuation question about how the VOA has entered them in the list. It is worth checking, because it affects both the rateable value and the relief.
Wales
Welsh small business rates relief gives 100% relief up to £6,000 rateable value, tapering to nothing at £12,000, and is limited to two properties per business in each local authority. The property must be occupied, and councils apply the relief automatically.
What does a holiday let's business rates bill look like?
In England, holiday lets qualify for the lower retail, hospitality and leisure (RHL) multipliers: 38.2p in the pound below £51,000 rateable value in 2026/27, plus a 1p supplement for most properties that were already in the list. Small business rate relief then comes off. In Wales the standard multiplier of 0.502 applies.
The law that defines retail, hospitality and leisure properties specifically includes self-catering and holiday homes, along with caravan parks and campsites. Empty properties can't use the RHL multipliers.
Worked examples, England 2026/27
These include the 1p transitional relief supplement, which most properties already in the rating list on 31 March 2026 pay in 2026/27 (so 38.2p becomes 39.2p) unless they get transitional or supporting small business relief.
| Example (made-up rateable values) | Before relief | After small business rate relief |
|---|---|---|
| One cottage, RV £9,000, owner has no other property | £9,000 × 0.392 = £3,528 | £0 (£12,000 or less) |
| One larger cottage, RV £14,000, no other property | £14,000 × 0.392 = £5,488 | About a third off: £3,659 |
| Two cottages valued separately, RV £9,000 each, after the grace period | £3,528 each, £7,056 in total | No relief on either: £7,056 |
| Category B complex, RV £24,300 (example above) | £24,300 × 0.392 = £9,526 | Too high for relief: £9,526 |
Transitional relief or supporting small business relief could change these figures if your bill rose at the 2026 revaluation; see our transitional relief guide. You can try your own figures in our business rates calculator.
Changes announced for 2027/28
Announced at the Budget on 28 October 2026, due from 1 April 2027 (subject to regulations): RHL multipliers of 39.5p and 44.5p; small business rate relief for qualifying RHL properties extended to full relief up to £18,000, tapering to £21,000, until 31 March 2029; a single £29,999 threshold for the total rateable value test when you have more than one property; bills for qualifying RHL properties capped by inflation in 2027/28 and 2028/29; and the 1p supplement continuing. On those figures, the £14,000 cottage above could get full relief if it meets the other conditions.
Wales, 2026/27
Holiday lets pay the standard multiplier of 0.502 (0.515 above £100,000 rateable value). They are excluded from Food and Drink Hospitality Rates Relief. As an example from Business Wales, a property with a rateable value of £7,000 has a liability of £3,514 before relief, gets £2,928 of small business rates relief and pays £586. Business Wales says the lower multiplier is due to extend to some visitor accommodation descriptions from 1 April 2027, with rates set in the Welsh budget. You must tell the council within 60 days when you become the ratepayer or the property becomes occupied or empty.
What records should a holiday let owner keep?
Keep a night-by-night record of when the property was available, when it was let and to whom, at what price, and when it was closed or used privately, plus your advertising and accounts. The same records prove the letting test, answer VOA forms and support any check or challenge.
The VOA asks for evidence when you apply and each year afterwards, and it can ask for trade information at revaluation. A simple, consistent set of records makes each of those easier:
- Booking calendar: every night available, let, blocked or closed, with the reason for any block (owner use, maintenance, site closure).
- Booking records: dates, length of stay, guest name and price for each booking, from your own system or your agent's or platform's statements. Mark any stays over 28 nights.
- Proof it was let commercially: adverts, listing pages, tariffs and evidence the price was at market rates.
- Friends and family: note any discounted stays, because they don't count as commercial lets.
- Charity nights (Wales): the arrangement with the registered charity and the dates used.
- Accounts: gross receipts (before commission), commission paid and running costs. These feed into how the VOA values lets.
- Property details: number and type of bedrooms and beds, facilities such as a hot tub, and photos.
If you are deliberately keeping a property below the test, keep evidence of that decision too, such as declined enquiries and the dates you chose not to take bookings.
What mistakes should I look for in a holiday let valuation?
Check the number of single bed spaces, the location and quality categories, whether the property should be in the rating list at all, whether an owner's or caretaker's home has been left out, and how units on the same site have been grouped. For complexes, check the trade figure and the facilities category.
Add the property to your business rates valuation account and look at the details the VOA holds. Things to check:
- Bed spaces: a sofa bed counted in a property that has bedrooms, bunks squeezed into a double counted as extra spaces, or a twin room counted twice.
- Quality category: a standard cottage placed in Category A because of one feature, or a dated property with no central heating or double glazing placed in Category B.
- Location category: a let in a quieter village compared with lets in a nearby resort hot spot.
- Complex percentage: a site with a pool and games room on 13.5% or 16% rather than 11%, or receipts that include non-rateable extras.
- Trade figures: receipts that include non-rateable extras, or an unusually good year treated as what any reasonably efficient operator would achieve.
- Domestic parts: an owner's or caretaker's flat on site is domestic, so the property should be split, with that part in council tax.
- Grouping: units on one site entered as one property or several in a way that doesn't match how they are occupied and run.
- The test itself: a property that no longer meets the letting test, or is now someone's main home, left in the rating list.
Comparing your entry with similar lets nearby, using GOV.UK's "Find a business rates valuation" service, is a quick way to spot an outlier.
When might it be worth challenging a holiday let's rateable value?
A challenge may be worth considering if the VOA has the wrong bed spaces, location or quality category, the wrong percentage or trade for a complex, or has included domestic parts. For a single let already on full small business rate relief, a lower value may make no difference to the bill, so check what is at stake first.
Start by working out what a change would actually do. If your only let has a rateable value of £12,000 or less in England (£6,000 in Wales) and you get full relief, a lower value won't change the bill. A challenge is more likely to matter where:
- the value is just above a relief threshold, such as £12,000 or £15,000 in England;
- you own several lets and have lost small business rate relief;
- you run a complex where the trade or the percentage drives a larger bill;
- the bed spaces, categories or domestic split are plainly wrong.
The steps are Check, Challenge, then Appeal to the Valuation Tribunal for England or for Wales. You must raise a check first, to correct facts such as bedrooms and facilities, then challenge within four months of the check decision, with your evidence, a statement and the rateable value you think is right. The value can go down, up or stay the same, and you keep paying meanwhile. Our guide to challenging business rates covers the time limits in full.
Whether a property should be in business rates or council tax at all is decided by the letting test, using the self-catering forms described above, and is a question for the VOA rather than the council.
You can do all of this yourself, free, through your valuation account. Some owners use a rating surveyor because they know how similar lets nearby have been valued and how the self-catering scheme is applied, and they keep track of the deadlines. No challenge is guaranteed to succeed. Agree any surveyor's fees in writing before they start.
Related guides
Business rates for holiday lets: frequently asked questions
Do holiday lets pay business rates?
Only if they pass the letting test. In England a holiday let must have been available to let commercially for at least 140 nights and actually let for at least 70 nights in the last 12 months, and be planned to be available for 140 nights in the next 12. Otherwise it pays council tax.
What is the 140 and 70 night rule?
It is the English test for moving a holiday let from council tax to business rates. The property must have been available for short commercial lets of 28 nights or less for at least 140 nights, and actually let for at least 70, in the last 12 months.
What are the rules for holiday lets in Wales?
In Wales the property must have been available for at least 252 nights and actually let for at least 182 nights in the last 12 months, and be planned to be available for 252 nights in the next 12. Since 1 April 2026 you can average the nights let over two or three years and count up to 14 nights a year donated to a registered charity.
Do nights let to family and friends count?
Not if they stay for free or at a discounted rate. Only commercial lets, meaning lets made to make a profit and usually at market rates, count towards the test. Your own use doesn't count either.
How does a night count as let?
The VOA treats a night as let if the property was occupied immediately before midnight. A Friday evening to Sunday morning booking therefore counts as two nights.
What happens if my holiday let doesn't reach 70 nights?
It is moved from business rates to council tax. Councils in England can charge up to twice the normal council tax on second homes, so it is worth asking your council how it treats them.
How is a holiday cottage valued for business rates?
The VOA usually values single lets and groups of up to four by a figure per single bed space, based on location and quality categories built from trading accounts. A double or twin room counts as two bed spaces and a single room as one.
How are holiday complexes valued?
Complexes of five or more units are valued at a percentage of fair maintainable trade: 11% for sites with very good facilities such as pools, 13.5% for most complexes and 16% for basic ones. Better facilities get a lower percentage because they cost more to run.
Can I get small business rate relief on a holiday let?
In England you may if you let only one property and its rateable value is under £15,000, with nothing to pay at £12,000 or less. In Wales relief is full up to £6,000 and tapers to £12,000, for up to two properties per business in each council area.
Why have I lost small business rate relief on my holiday lets?
In England relief is meant for one property. Once a grace period for a second property ends, you only keep relief if every other property you have is worth £2,899 or less and the total is under £20,000 (£28,000 in London). Most holiday cottages are worth more than that.
Do holiday lets get the retail, hospitality and leisure multiplier?
Yes, in England, because self-catering and holiday homes are listed as qualifying uses. In 2026/27 they pay 38.2p below £51,000 rateable value, and most properties already in the list also pay a 1p supplement.
Can I challenge my holiday let's rateable value myself?
Yes. You can check and challenge free through your business rates valuation account. A rating surveyor can do it for you if you prefer, and any fees are agreed with them directly.
Sources
We checked the facts on this page against these official sources on 13 November 2026:
- How self-catering holiday lets are valued for business rates
- Rating Manual: Holiday accommodation (self-catering)
- Apply for business rates for a self-catering property in England
- Apply for business rates for a self-catering property in Wales
- Changes to business rates rules for self-catering properties
- Business rates (introduction)