Review outcome on business rates in England & Wales

Last updated: 9th September 2022

At the beginning of the year, the government published the consultation outcome following a review on business rates for self-catering accommodation.

The review was undertaken to tackle second homeowners registering for business rates without the intention to actually let the property. The government have responded to the review by stating there will be a strengthening of the qualifying criteria for business rates from April 2023. To read the full consultation outcome click here.

What are the benefits of falling within the criteria of business rates, also known as non-domestic rates?

Being assessed for business rates opens up the possibility of being eligible for small business rate relief. With this you receive full relief on a single property with a rateable value below £12,000. The relief is gradually phased down for properties with a rateable value between £12,001 - £15,000. You will also not be required to pay council tax for the property.

England

What is the policy on business rates currently?

Currently, in England, a property is eligible for business rates if it is available to let for short periods that total 140 days or more per year.

How is it going to change and when?

The consultation outcome states that from April 2023 a property will only be assessed for business rates if it can meet the criteria below. Not only do these regulations come into place from April 2023, but they also apply to the 12 months prior, meaning you will need to have evidence that you meet their requirements from April 2022 - 31st March 2023 to be eligible for business rates from April 2023. The criteria is as follows:

- It is available to let for short periods that total 140 days or more per year in the year after the day in question

- It was available to let for short periods that total 140 days or more in the previous year

- It was actually let commercially, as self catering accommodation, for short periods totalling at least 70 days in the previous year

If it is a second home (available to let for short periods less than 140 days per year) the homeowner is liable for council tax. 

What happens if I already own a holiday let but do not meet the new standards?

The Valuation Office Agency (VOA) value property in England, for council tax or business rates purposes, depending on the nature of the property’s use. The government advise you get in touch with them as soon as possible so the property can be assessed as domestic and revert accordingly to a council tax valuation. 

Do I need to do anything if my holiday let does meet the new criteria?

Yes, you just need to be prepared to provide evidence. The VOA may require you to submit relevant information as part of the ongoing compliance checks. However, it is not yet clear what information will be needed. Do rest assured though, as your letting agent Classic Cottages will be able to support you with this and help to provide evidence when we know what is needed.

What if I have a newly registered holiday let?

As it stands currently it is not clear, but as soon as we do have more information, we will communicate this. 

Wales

The Welsh Government have announced changes to council tax charges for second homeowners.

What is the policy on business rates and second homeowners at the moment?

Currently local councils have the ability to charge second homeowners a premium of up to 100% on their council tax, meaning owners are expected to pay double the usual council tax amount in some locations.

To meet the current criteria for business rates to apply, a self-catering property must:

- Be available to let for short periods that total at least 140 days (20 weeks)

- Be actually let for at least 70 days (10 weeks)

How is it going to change and when?

For second homeowners, the premium charge on council tax is being increased to a 300% cap. This is being introduced from April 2023. 

It has recently been announced that Pembrokeshire will be implementing a 100% premium on council tax for second homeowners.

The criteria for business rates in Wales is as follows, and will come into force in June 2022 with practical effect from 1 April 2023:

- Be available to let for short periods that total at least 252 days (36 weeks)

- Be actually let for at least 182 days (26 weeks)