Coast & Country Cottages Holiday Letting Secrets 2026
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Whether you plan to use your second property for your own holidays or let it out and make a profit, you are required to pay certain rates and taxes. Our guide to holiday let business rates and council tax for second homes in England will help you understand the difference.
We’ve put together a list of the most commonly asked questions so you can be informed about the right thing to do when it comes to your holiday home.
Use the links below to skip to a specific topic or read on for a full guide to holiday let business rates and council tax.
Holiday let business rates are taxes or rates paid to local councils on properties that are let commercially. The funds are used to help finance local services in the same way as council tax on domestic properties. Business rates are charged on most non-domestic properties.
If you own a second home or holiday home that you rent out to the public you will need to pay holiday let business rates. If you only use the property for yourself, you’d pay council tax, as you are not getting any monetary gain from it.
Holiday let business rates and council tax are two distinct forms of local taxation in the UK. They apply to different types of properties and circumstances.
It is often preferable for holiday home owners to pay business rates rather than council tax. This is because owners avoid paying a second home council tax premium, and many properties receive ‘small business rates relief‘, meaning a reduction in their tax bill.
Find out how much council tax you need to pay by going to the Gov website.
As mentioned above, your property is only eligible for business rates if it meets certain letting criteria. In England, these requirements are as follows:
If your property isn’t currently rated for business rates, but has met these criteria in the last 12 months, you can apply to pay business rates. To do this, you must complete an application form and send it to the Valuation Office Agency (VOA).
If your property does not meet these criteria, you must continue to pay council tax as usual. However, there are other exceptions for the second home council tax premium, which it’s worth checking your holiday home against. You can view these for South Hams District Council here.
As mentioned above, there are two main benefits to paying business rates for your holiday let rather than council tax. However, these may not apply to all circumstances; it’s important to research and calculate the tax bill for your own property to be sure.
Many holiday lets will be eligible for small business rate relief, reducing the amount of tax owners have to pay. This is judged based on the following criteria:
If your holiday let doesn’t meet the letting criteria for business rates, and doesn’t suit any other exception criteria, it will be taxed as a second home. This may incur a council tax premium, depending on which local council the property is subject to.
In England, councils can now charge a second home council tax premium of up to 100%, meaning you’ll pay double the standard residential rate. However, this varies by council, so it’s important to check with the council in your area. The rules for Wales are different, and premiums of up to 300% can be charged.
South Hams District Council charge a premium of up to 100% on second homes, which you can read more about here.
Business rates in England are calculated using a two-step process. First, your holiday home will be given a rateable value. Second, the rateable value is multiplied by the unique business rate as set out by the government.
The rateable value of your holiday let is assessed by the Valuation Office Agency (VOA) based on its estimated open market rental value. Factors influencing this valuation include:
You can check the rateable value of your property on the VOA website.
Once you have the rateable value, multiply it by the relevant business rates multiplier to calculate your annual business rates bill.
If your rateable value is less than £51,000, you qualify for the small business multiplier rather than the standard multiplier. At the time of writing (April 2025), the small business multiplier is 49.9 pence and the standard multiplier is 55.5 pence.
Use the multiplier table and example below to help you calculate your own business rates bill. You can also estimate your business rates on the Government website.
| Year | Standard Multiplier (pence) | Small Business Multiplier (pence) |
| 2020 to 2021 | 51.2 | 49.9 |
| 2021 to 2022 | 51.2 | 49.9 |
| 2022 to 2023 | 51.2 | 49.9 |
| 2023 to 2024 | 51.2 | 49.9 |
| 2024 to 2025 | 54.6 | 49.9 |
| 2025 to 2026 | 55.5 | 49.9 |
John owns a holiday home in Salcombe that qualifies for business rates. The rateable value of his property is £10,000, so he uses the small business multiplier to estimate the annual business rate.
Calculation:
£10,000 (rateable value) x £0.499 (small business multiplier) = £4,990 (basic business rates)
Because the rateable value of his holiday let is less than £12,000, John is able to apply for 100% small business rates relief, providing this is the only holiday property he owns.
Recently, the Government has announced that they’ll be introducing a ‘holiday let registration scheme’. This will make it mandatory for all holiday lets to be registered with the government, contributing to a simple online register which will show reliable data on all of the holiday lets in England.
The aim is to gain insight into the impact of short-term holiday lets and gather information that will improve understanding of the benefits and challenges associated with holiday home letting. The opportunities and impact of short-term tourism on communities will also be investigated.
There is still limited information on the details of the scheme and when it will come into place, but the government website will be updated as more details become available. Read the Government statement for more information on what to expect from the scheme.
Whether or not your property is a furnished holiday let is completely separate from council tax, and relates to HMRC rules on holiday letting, rather than your local council.
Furnished holiday lets were a unique tax category which allowed several tax relief options for holiday let owners. However, the furnished holiday let scheme came to an end in April 2025, meaning the associated tax benefits are no longer available, and holiday lets are now taxed as standard rental properties.
You can read all about what the scheme involved, and tax benefits which you can still take advantage of, in our guide to furnished holiday let tax changes.
For further clarification and to ensure that you have all the details that you require to run your holiday let, contact your local council. They will be able to help you find out about your business rates, small business rate relief, and how to pay your bill.
If you would like to find out more about letting your holiday home, call our experienced team on 01548 802171 or complete the form below to request contact from our team, including a copy of our free Owner Guide.
The information contained in this article was accurate at the time of writing (February 2024), based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like more up-to-date information.
Nothing in this article constitutes the giving of financial, tax or legal advice to you; please consult your own professional advisor (accountant, lawyer etc) in this regard. If we have referred within the article to a third-party provider of unregulated holiday let mortgages, this is due to the fact that such mortgages aren’t currently regulated by the FCA.
As a helpful reminder, your home may be repossessed if you do not keep up repayments on a mortgage, so again anything you decide to do in this particular area is one on which you should take your own professional advice on too, as we aren’t providing and can’t provide you with this.
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