Holiday let business rates or council tax? How it works in England and Wales

A holiday let in England or Wales pays business rates instead of council tax only if it passes a letting test. In England it must have been available to let for at least 140 nights and actually let for at least 70 nights in the last 12 months. In Wales the bar is 252 nights available and 182 let. Pass, and you may pay little or nothing once small business rate relief is applied. Miss it, and you pay council tax, often with a second homes premium on top.

This guide covers England and Wales. GOV.UK says Scotland and Northern Ireland have different rules.

Do holiday lets pay business rates or council tax?

GOV.UK says whether you pay business rates depends on two things: how many nights your property is available to let each year, and how many nights it was actually let. If it meets the criteria, you must apply to the Valuation Office, which sets a rateable value. If it doesn't, it stays in council tax.

So the answer is not about whether you call it a business. It is about the nights.

The letting test: England vs Wales

In plain terms, 140 nights is a little under 40% of the year. Wales asks for about half the year actually booked and about 69% of it open for bookings.

The letting must be commercial, which GOV.UK describes as with the intention of making a profit. You can't count:

• nights you used the property yourself, including letting it to friends or family at a discounted rate
• nights it was closed for repair or refurbishment, or the site was closed
• future bookings that haven't happened yet

Stays of more than 28 nights don't count towards the nights actually let. They can count towards the nights available, but only if the property could have been booked for 28 nights or less.

What changed in 2026

• Wales, from 1 April 2026: if you fell short of 182 nights let, you can use the average over the previous 24 or 36 months, or across several holiday lets in the same location or very near each other. You can also count up to 14 nights a year donated to a registered charity.
• England, from 24 July 2026: two kinds of holiday let only need the plan to be available for 140 days in the next 12 months. One is 5 or more holiday lets in the same property. The other is a holiday let that shares land with a different business run by the same owner, like a pub with a cottage. Neither can be anyone's main home.

For a single flat or house, the standard test still applies.

How is the business rates bill worked out?

There are three steps.

1. Rateable value. The Valuation Office usually starts from fair maintainable trade: the annual trade the property should make if run in a reasonably efficient way, based on its income and expenditure, type, location and facilities. For a single let, it then works out a value per bed space.
2. Multiplier. Your council multiplies the rateable value by a multiplier. In England for 2026 to 2027, it's 43.2p in the pound if your rateable value is below GBP 51,000. Some retail, hospitality and leisure properties use a lower 38.2p, so ask your council whether that applies to your let. In Wales, the standard multiplier for 2026 to 2027 is 0.502.
3. Relief. Any relief you're entitled to comes off the bill.

Both England and Wales moved to new rating lists on 1 April 2026 after a revaluation. You can look up any property's rateable value, and how it was worked out, with GOV.UK's "Find a business rates valuation" service. If you think it's wrong, you can challenge it through your business rates valuation account.

Small business rate relief can bring the bill to zero

England. If your rateable value is GBP 12,000 or less and it's the only property your business uses, you pay no business rates. Between GBP 12,001 and GBP 15,000 the relief tapers from 100% to 0%. GOV.UK's own example: a rateable value of GBP 13,500 gets 50% off.

For example, GBP 13,500 x 43.2p is GBP 5,832 before relief, so 50% off leaves GBP 2,916 for the year.

If you buy a second property on or after 27 November 2025, you keep relief on your main property for 36 months. If you lost some or all of your relief in the 2026 revaluation, ask your council about supporting small business relief.

Wales. Eligible properties with a rateable value up to GBP 6,000 get 100% relief. Between GBP 6,001 and GBP 12,000 the relief tapers from 100% to zero, and it's limited to two properties per business in each council area. In the Welsh Government's own table, a GBP 9,000 rateable value gives GBP 4,518 before relief and GBP 2,259 after 50% relief.

Your council applies the relief, so ask them what you're entitled to.

What if your holiday let doesn't pass?

Then it pays council tax. GOV.UK calls a furnished property that isn't anyone's main home, such as a holiday home, a second home. Your council decides whether yours counts.

• England: councils 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.
• Wales: councils can charge a premium of up to 300% of the standard rate on second homes. From 1 April 2027, a holiday let that drops out of business rates can't be charged the premium for one year.

Getting planning permission as holiday accommodation doesn't settle the question on its own. Senedd Research notes that in Wales the planning and tax systems work independently.

The test also isn't a one-off. Once you're in business rates, you're sent a form each year to confirm you still meet the criteria. If you don't, you're moved back to council tax.

For what this means locally, see our guides to the 140/70-day rule in Bristol and Bath and the 252/182-day rule in Cardiff.

Can you just switch a second home to business rates?

Not by declaring it. The nights must be genuinely available and let commercially. Senedd Research describes commercial letting as letting at market rates and actively advertising, and it says that wouldn't include letting to friends or relatives at zero or nominal rents. You apply to the Valuation Office on a form, and once you're in business rates you confirm every year that you still meet the criteria.

If your property is mostly empty or used by family, plan on council tax.

How to apply

1. Count the nights your property was genuinely available and actually let in the last 12 months.
2. Take out personal use, discounted friends-and-family stays, closures and stays of over 28 nights.
3. Check the result against the test for England or Wales.
4. Fill in HMRC's self-catering form, one per property. For England, email it to [email protected] with the subject "Self-catering application - England". For Wales, email [email protected] with "Self-catering application - Wales". You can also post it to the Valuation Officer, Wycliffe House, Green Lane, Durham DH1 3UW.
5. When the rateable value is set, look it up and ask your council about small business rate relief and which multiplier applies.
6. Keep your booking records. You'll need them for the yearly confirmation form.

Separately, short-let hosts face new registration rules. See our guides to England's short-term let register and the Wales visitor accommodation register.

The bigger point for owners

The letting test rewards a let that is open for bookings and actually booked. A holiday let that isn't let enough can end up on council tax with a premium, so occupancy matters for the tax bill as well as the income. If you're still weighing it up, read Airbnb vs a long-term let.

How Occupaid helps

Occupaid co-hosts and manages short lets in Bristol, Bath and Cardiff: the listing, pricing, calendar, guest messages and turnovers. Our guide to what an Airbnb management company does explains what to expect. There is no long-term lock-in.

Book a call and we'll talk through your property.