Owning a second home or holiday cottage is a dream for many, but it also comes with financial obligations that can be complex to navigate. One of the most frequently asked questions is whether to pay council tax on holiday homes or switch to business rates on holiday lets. This guide breaks it all down for you.
If you use your holiday property for personal use and it isn’t let commercially for at least 70 days a year, you’ll likely be liable for council tax on holiday homes. Council tax bands are based on the property’s value and local authority rates, and some councils may apply a premium on second homes.
If your property is available for short-term letting for 140 days or more and actually let for at least 70 days, it may qualify for business rates on holiday lets instead of council tax.
To estimate what you might owe, use a holiday let business rates calculator. These tools help you determine your rateable value and the multiplier applied by your local authority.
They depend on your property's rateable value. For example, if your property has a rateable value of £10,000, and the multiplier is 49.9p, your gross rates bill would be £4,990. With reliefs applied, this could be significantly reduced or even nil.
Holiday homes not let for at least 70 days a year revert to council tax on holiday lets. You may face higher rates if your local council imposes second home premiums, which can be up to 100% in some areas.
No. Properties are subject to one or the other, not both, depending on their usage and letting records.
For those letting holiday cottages regularly, switching to business rates on holiday cottages can unlock serious savings, especially when coupled with Small Business Rate Relief (SBRR).
Council tax on holiday homes can be costly if your property is not used commercially. Some councils now charge up to 200% for second homes, so it’s worth evaluating your letting schedule and Small Business usage.
Whether your holiday home is a personal retreat or a rental business, understanding the difference between council tax on holiday homes and business rates on holiday lets is key to saving money. Take time to assess your usage, calculate your potential rates with a holiday let business rates calculator, and choose the best route for your financial future.
Ready to take control of your holiday home finances? Subscribe to our newsletter or contact a tax advisor to find the most efficient way forward.
