Contents
• What is the difference between council tax and business rates?
• Do I have to pay council tax or business rates on my holiday home or holiday let?
• How are business rates calculated on my holiday let?
• How do I register my holiday let as a business?
• What are the benefits of owning a furnished holiday let?
• Where do I start if I want to purchase a holiday home?
What are business rates?
Business rates are charges that pay toward local services, like council tax, but are intended charges for solely commercial-use properties, such as self-catering holiday lets in this instance.
However, certain factors need to be in place to qualify for business rates on a holiday let.
What is the difference between council tax and business rates?
The difference is council tax impacts residential properties, whereas business rates affect commercial ones.
When your holiday property pays business rates, you are not required to pay council tax on it as it is being used for commercial purposes.
Do I have to pay council tax or business rates on my holiday home or holiday let?
If you have a holiday home you only use for yourself or your loved ones, then you only pay council tax.
When it comes to holiday lets, however, whether you pay business rates or not depends on how much time your property has been open commercially and actively used.
As of 2023, the UK Government re-evaluated business rates. This means you only pay business rates if your property has been open for short-term letting for at least 252 nights and let for at least 182 nights in a year. If you newly own a holiday let, but do not meet this criteria, you still must pay council tax until these conditions are met for business rates.
How are business rates calculated on a holiday let?
In the UK, business rates are determined through an estimate that varies depending on the location of your property as well as other important factors, such as property rateable value.
To estimate your holiday let business rates, begin by figuring out the rateable value of your property using GOV.UK’s business rates multiplier and calculator.
For England and Wales:
|
Rateable value: |
Type of multiplier you should use: |
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£51,000 or more |
Standard multiplier |
|
Below £51,000 |
Small business multiplier |
Your next steps will be to use your correct multiplier to multiply your property’s rateable value, which will show the amount you have to pay in business rates, without any relief deductions if not required.
If you are eligible for any business rate relief, take that off the amount given from your multiplier to give you an estimate of your overall business rates owed.
How do I register my holiday let as a business?
Before you can welcome guests to your holiday let, navigating the legalities of establishing your holiday let as a business in the UK is an essential starting point.
Indicated below are various steps to help you through the registration process to ensure compliance with regulations, taxation and data protection as part of registering your holiday let.
Beginning the registration process: How-to
- Outline your business structure: Determine your business structure, whether it's as an individual, partnership or through a limited company. If you are unsure, you should try and seek professional advice to make an informed choice on which is best for you.
- HMRC registration: Register for a Self-Assessment with HM Revenue and Customs (HMRC). This step is crucial for accurately reporting rental income and expenses for your holiday let and alternatively paying what you owe.
- Tax considerations: Understand the tax implications of your holiday let business. Depending on your income, you may be required to pay ‘Value Added Tax (VAT).’
- Data protection compliance: Ensure compliance with data protection regulations, especially the General Data Protection Regulation (GDPR). Obtain guest consent for data collection and processing if you manage bookings directly or online.
- Follow local council requirements: Check with your local council for any additional licensing, planning permissions or permit requirements specific to your holiday property type or area.
By following these steps, you can successfully navigate the registration process and legally establish your holiday let business in the UK.
Benefits of furnished holiday lets
In the UK, there are attractive tax benefits to be had with furnished holiday lets.
Income earnings
The substantial amount of savings gathered from a furnished holiday let can go towards increasing wealth or investment in the property as a business asset.
Positive pension contributions
Positive pension contributions and tax advantages on your overall income generated from your furnished holiday let can be classed as ‘relevant earnings’ by the HMRC.
Business property relief
In some cases, furnished holiday lets will qualify for business rate relief and reduce the amount of inheritance tax payable if the property is bequeathed in either your lifetime or at the point of your death.
Capital Allowances
Furnished holiday lets allow you to claim capital allowances on furniture, furnishings and equipment purchased for your property. Things like cleaning products, maintenance costs and even your travel to and from the property can be classed as expenses too.
Family investment
Turn your holiday home into a business asset and have a property that will be treasured for generations to come at Silverlake Estate.
Begin your holiday home ownership journey with Silverlake
Whether you want to own a holiday home for your own escape or are looking to get into holiday letting, the Silverlake team makes this simple.
Here at Silverlake, you have the opportunity to own a holiday home with stunning lakeside views in a prime location for Dorset holidays. You can enjoy views over the expansive nature reserve from your property with some of the best countryside views in the UK. At your home-from-home, you can reap all the tax advantages and benefits holiday living has to offer and more.
With premium facilities on your doorstep, such as the Hurricane Spa & Terrace, there are countless activities for homeowners and guests to enjoy in all seasons at Silverlake.
If you have any questions about getting started with a holiday home or holiday let, contact our property team today.
If you are passionate about your holiday vision becoming reality, discover the range of available Silverlake property designs.