Owning a holiday home, whether it’s for your own use or run as a holiday let business, will mean you need to pay tax to the relevant authorities.
However, the way your tax is calculated and the amount due will depend on whether your holiday let is subject to council tax or business rates.
In this detailed guide, we’ll explain the difference between holiday let council tax and business rates, which tax you’ll need to pay, and how to save money on your tax bill.
Our guide to council tax and business rates for holiday lets
Use the quick links below to skip to a particular topic, or read on to discover all you need to know about holiday home council tax and business rates:
What is the difference between council tax and business rates for holiday lets?
If you own any property in the UK, you will need to pay either council tax or business rates on your property. This is true for holiday homes as well, with which one you pay depending on how much your holiday home is let.
These taxes are paid to your local district council or unitary authority, rather than HMRC. The revenue raised will help fund vital local services, like refuse collection and road maintenance in the area where your holiday home is located.
Second home council tax
Council tax is an annual fee charged by the local council on residential or domestic properties. As with any residential property, a holiday home which is mainly for personal use will be included in this category.
This is often a more expensive option than business rates, especially with second home council tax premiums introduced by some councils.
Business rates for holiday lets
Business rates are a local tax that is paid on properties used commercially rather than domestically. A holiday let will fall under this taxable bracket if it meets certain letting days criteria.
The cost of paying business rates is likely to be less than council tax, as it avoids second home premiums. Owners can also benefit from Small Business Rates Relief, which we explain in more detail here.
Do I need to pay council tax or business rates on my holiday home?
Business rates holiday letting criteria
For a holiday let in England to qualify for business rates rather than council tax, it must meet the following criteria:
- Available for short-term letting periods for 140 days or more per year
- Actually let for 70 days or more per year
You must also plan to make your property available to let for at least 140 nights in the next 12 months.
If your holiday let is in Wales, the rules are significantly different – the minimum available letting days are 252, and the property needs to be actually let for 182 days.
When to pay council tax on a holiday let
If you own a holiday home which isn’t let to paying guests or doesn’t meet the criteria above, you will need to pay council tax.
Working out the council tax on your holiday home will depend on the valuation band that it falls into, the amount your local council charges for that band, and whether a second home council tax premium is charged.
Are holiday let business rates cheaper than council tax?
Generally, business rates will work out cheaper than council tax. This is due to two main reasons: The avoidance of a second home council tax premium, and the availability of Small Business Rates Relief.
Second home council tax premiums
Councils in England are allowed to charge second homes a premium of up to 100%. However, how much they charge, or even whether they charge a premium at all, is up to the local council.
For example, many councils in Devon charge a 100% premium, meaning second home owners effectively pay double council tax. Cornwall council takes the same approach.
In Wales, councils can charge a second home premium of up to 300%, although few councils have opted to charge the maximum amount.
To find out the council tax rules for holiday lets in your area, contact your local authority or visit their website.
Small business rates relief
Many holiday lets registered for business rates could also be eligible for small business rates relief. This is a scheme which allows small businesses a reduced business rates bill, providing they only have one property and it has a ‘rateable value’ less than £15,000.
If your property has a rateable value of £12,000 or less, you will be eligible for 100% relief, meaning you won’t have to pay any business rates.
If your rateable value is between £12,001 and £15,000, you’ll receive partial relief on a sliding scale, ranging from 100% down to 0%, depending on the exact value.
For tips on other holiday letting taxes you may encounter, read our holiday let tax guide. To learn more about saving money while letting a holiday property, read our blog on holiday let costs.
How are holiday let business rates calculated?
Your holiday let business rates will be calculated based on the property’s rateable value, which depends on various attributes. These range from your holiday home’s size and how many people it can accommodate, to where it is located and its annual turnover.
Rateable value is calculated by the Valuation Office Agency (VOA). Generally, the bigger and more successful your holiday home business is, the higher the rateable value.
The Government has an online tool you can use to check the VOA’s rateable value for your holiday property.
Once you have this, you can use the Government’s guide to help you calculate your business rates bill, using the ‘multiplier’ that applies to you.
There are two multipliers for retail, hospitality and leisure businesses (which includes holiday lets): The standard multiplier, for businesses with a rateable value of £51,000 to £499,999, and the small business multiplier, for businesses valued at less than £51,000. For the 2026-27 tax year, the small business multiplier for holiday lets is 38.2 pence and the standard multiplier is 43 pence.
Tax can be a complex subject and differs per individual case, so we always recommend you seek professional advice.
We have teamed up with Zeal Tax, who offer a free tax helpline for Helpful Holidays owners. For tax-specific queries, contact Zeal on 01633 499771, email sykesfamily@gozeal.co.uk or visit www.gozeal.co.uk/sykesfamily.
Holiday let council tax vs business rates FAQs
Are business rates more expensive than council tax?
No — for most holiday let owners, business rates are cheaper than council tax. This is because business rates avoid the second home council tax premium (up to 100% in many English councils), and holiday lets often qualify for Small Business Rates Relief, reducing the bill by up to 100% depending on the property’s rateable value.
How does a holiday let qualify for business rates?
Holiday lets qualify for business rates by meeting fixed letting criteria. In England, your property must be available for short-term letting for at least 140 days per year and actually let for at least 70 days. You must also intend to make the property available to let for at least 140 nights in the following 12 months.
How much tax do I pay on a holiday let?
This depends on several factors, including your income, ownership structure, and whether your property qualifies for business rates or council tax. Since the Furnished Holiday Lettings regime ended in April 2025, holiday lets are now taxed in line with other property rental businesses, meaning previous tax advantages no longer apply.
For detailed information, read our guide to tax on holiday lets.
How are business rates calculated for a holiday let?
Business rates are calculated in two steps. First, the Valuation Office Agency (VOA) assigns your property a rateable value based on factors including its size, location, and earning potential — you can check yours on the Government website.
Then, you multiply the rateable value by the relevant business rates multiplier: for the 2026-27 tax year, the small business multiplier is 38.2 pence and the standard multiplier is 43 pence.
If your rateable value is £12,000 or under, you may qualify for 100% Small Business Rates Relief, meaning no bill to pay at all.
Help letting your South West holiday home
At Helpful Holidays, our team of holiday letting experts is on hand to offer any advice on all aspects of holiday letting, from cleaning and changeovers to starting a glamping business.
To learn more about letting with Helpful Holidays, complete the form below. Our team will be in touch to answer any questions, and you’ll receive a copy of our FREE Owner Guide.
Please Note: The information contained in this article was accurate at the time of writing, based on our research. Rules, criteria and regulations change all the time, so please contact our prospective new owner team if you’d like to hear how. 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 this 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.
