Holiday homes registered for business rates will now have to meet HMRC's qualifying criteria in a new clampdown...

Second home owners who let a furnished property in England as a holiday home will be aware that it is subject to business rates rather than council tax. Whilst business rates can be more costly, most holiday homes qualify for Small Business Rates Relief (SBRR), reducing the rate below the amount of council tax payable. It seems that some second hot owners have been abusing this tax break.

The current rules allow homeowners to register for business rates and then claim SBRR if they ‘intend’ to let their property as a holiday home, whether or not it’s actually let as such. From April 2023 the rules will be tightened so that business rates will only apply where the property:

  • Will be available for short-term lets as self-catering accommodation for at least 140 days per year in the previous year and the one ahead; and
  • In the previous year, the property was actually let as a short-term self-catering accommodation for at least 70 days.

Local authorities will be able to ask for evidence to prove that these conditions are met.

If you own a holiday home and are unsure about whether you meet the criteria for SBRR, please do not hesitate to contact us on 01384 376964

Folkes Worton LLP Chartered Accountants – Accounting for the Future