Business Rates shock for holiday let owners – warning

Business Rates shock for holiday let owners – warning


Todays other news


The Valuation Office Agency has issued a reminder that changes to eligibility rules for self-catering properties will come into effect from April 1 – and some owners may be in for a shock.

A leading expert in the field says the increased thresholds will be looked at retrospectively, meaning holiday let owners could face significant unexpected financial impacts.

Currently holiday lets in England only need to be available for commercial letting for 140 days or more over the year to qualify for business rates. From April 1 holiday lets in England must be available for commercial letting for a total of 140 days or more in the current and previous year. 

The major change is that the property must have also been actually commercially let for 70 days in the previous 12 months – meaning the thresholds are being applied retrospectively.

Richard Bond, founder of holiday lets firm Finest Retreats, warns: “Many owners may not be aware that the new thresholds don’t just apply to the 23/24 tax year but that they will actually have had to meet the new thresholds within the 22/23 tax year in order to continue to qualify for Business Rates.

“Not only could this retrospective evaluation take some holiday let owners by surprise but it could also have significant financial impacts on them if they are suddenly switched from Business Rates to Council Tax charges.

“Whilst we welcome tax premiums on empty second homes, which have little benefit to local economies, it seems unfair that holiday let owners are expected to have met the new thresholds in the previous tax year without knowing about the increased requirements.

“Holiday let properties very much operate as small businesses within the UK’s tourism market and, when professionally marketed, can provide six times more income for the local economy**. But, following our own research, we are aware increased taxations could see holiday rental owners exit the market – which would have a detrimental effect on their surrounding local economy.

“Whilst increased thresholds and taxations encourage owners to professionally market properties for holiday lettings, it is important increased requirements do not push small holiday lets out or into financial difficulty, if they’ve had a bad season due to reasons outside of their control.”

He continues: “With the new thresholds retrospectively reviewing booking data, some holiday let owners may be forced out of the market as they face unexpected, significantly higher tax costs. With holiday lets contributing significantly to local economies, this could have knock-on effects to other local businesses in the area, as those tourists who would have eaten in local restaurants, shopped at local stores and visited surrounding attractions are no longer there.”

Finest Retreats claims that fully-managed holiday lets can generate up to six times as much spend per property per year as a second home and up to three times as much as an owner-occupied property, benefitting the local communities.

Share this article ...

Join the conversation: Login and have your say

1 Comment
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Recommended for you
Related Articles
The Chancellor must cancel the business rates rises due next...
Airbnb and Women’s Aid are launching a pilot that will...
Landlords are wary of investing in new properties because of...
Council scheme to hike taxes on second homes costs £50,000...
New figures published by HMRC show a 7% rise in...
Reeves to slash Right To Buy discount on Wednesday...
A report from Propertymark has laid out the stark and...
Recommended for you
Latest Features
Agents should not panic about the controversial Renters Rights Bill,...
Foxtons says this week’s surprise stamp duty rise won’t deter...
Rightmove is testing an AI-powered tool...
Sponsored Content
In an industry where compliance and client money handling are...
PropTech provider Reapit will announce the latest enhancement to its...
B-hive Block Management Partners Celebrates Major Milestone With Over 100...

Send to a friend

In order to send this article to a friend you must first login. Click on the button below to login or sign up.

No one likes pop-ups ...
But while you're here