Holiday Lets and Business Rates: What Landlords Need to Know in 2025/26

The end of the favourable furnished holiday lettings (FHL) tax regime has simplified tax reporting for landlords. However, if you own a holiday let, there are still important rules to follow — especially when it comes to business rates.

In some cases, switching from council tax to business rates could significantly reduce your costs — or even eliminate them altogether. But to qualify, you’ll need to track the number of days your property is available and let out, as the rules vary between England and Wales (and differ again in Scotland and Northern Ireland).

Here’s what holiday let owners need to know.

🔍 When Do Holiday Lets Fall Under Business Rates?

Instead of paying council tax, a holiday let may be assessed for business rates if it’s used as a self-catering property and meets certain day-counting thresholds. These depend on location:

📍 Holiday Lets in England

To qualify as a business and be assessed for business rates, your property must:

• Be available to let for at least 140 nights in the year, and
  
• Be actually let for at least 70 nights in the same period
  

If you meet both criteria, your property becomes liable for business rates, not council tax. This can be financially beneficial — especially if your property qualifies for Small Business Rate Relief.

💷 Rateable Value and Relief

• If the rateable value is less than £12,000 and it’s your only business property, you may receive 100% relief — no business rates to pay
  
• Between £12,000 and £15,000, the relief tapers from 100% to 0%.

For 2025/26:

• The small business multiplier is 49.9p outside London
  
• In London, it’s 51.9p per pound of rateable value
  

You’ll need to apply for a change to business rates via the Valuation Office Agency (VOA). If eligible, write to your local council to request Small Business Rate Relief – it’s not applied automatically in England.

🏡 Example 1

A landlord lets out a coastal cottage in Devon. It’s available for over 140 nights and let for over 70 nights. The rateable value is £9,000.

➡ The property qualifies for business rates
➡ 100% Small Business Rate Relief applies
➡ No business rates to pay

🏡 Example 2

A Suffolk holiday let is available year-round and let for over 70 nights. The rateable value is £13,500.

➡ Business rates due before relief: £6,736.50
➡ With 50% relief, the landlord pays: £3,368.25

🏠 Own More Than One Property?

If you acquire a second business property, you can still receive relief on your main property for 12 months.

After that:

• You may continue to qualify if none of your properties has a rateable value over £2,899
  
• And your total rateable value across all properties is below £20,000 (or £28,000 in London)

🏴 Holiday Lets in Wales

The rules in Wales are stricter.

To qualify for business rates, the property must:

• Be available to let for 252 nights in the year, and
  
• Be actually let for 182 nights
  

These higher thresholds mean fewer holiday lets qualify under business rates in Wales.

💷 Rateable Value and Relief in Wales

• 100% relief is only available if the rateable value is £6,000 or less
  
• Relief gradually decreases between £6,000 and £12,000
  
• Only two properties per local authority area can benefit from the relief
  
• Unlike England, relief is given automatically

✅ Why Does This Matter?

Switching from council tax to business rates can significantly reduce costs for landlords — in some cases to zero. With furnished holiday letting tax rules now removed, business rates may become a more important area of tax planning.

📌 What You Need to Do

1. Track your letting days — availability and actual bookings
   
2. Check your property’s rateable value with the VOA
   
3. Apply for business rates if eligible
   
4. Claim Small Business Rate Relief via your council (in England)

🧠 Final Tip

Even without the furnished holiday lettings tax regime, letting days still matter. If you want to benefit from lower or zero-rated business rates, keep accurate records, ensure you meet the required thresholds, and apply as soon as possible.Need help calculating your potential savings or checking eligibility? The team at Yorkshire Accountancy can guide you through business rates, property income tax, and more.