Article for owners
Council tax or business rates: which does a short let pay?
A home let to guests pays either council tax or business rates, never both. Which one depends on how many nights it's available and how many it's actually let. England and Wales set different numbers, and a home that falls short can end up paying extra council tax as a second home.
The short answer
- England: business rates if the home was available to let for at least 140 nights and actually let for at least 70 in the last 12 months, and you plan to make it available for 140 in the next 12
- Wales: the same test with higher numbers, 252 nights available and 182 let
- Below that, it pays council tax, and the council may add a second home premium
- On business rates, small business rate relief can cut the bill a long way, sometimes to nothing
Why it matters
Both bills are paid to your local council. A furnished home that nobody lives in as their main home counts as a second home for council tax, and councils can now charge extra on second homes.
A business rates bill is based on the home's rateable value, and a single holiday let with a modest rateable value can qualify for relief that removes the bill altogether. For a home let to guests through the year, that can be the cheaper side to be on.
The test in England
England: business rates for a holiday let (checked 7 November 2026)
- Available to let
- At least 140 nights in the last 12 months
- Actually let
- At least 70 nights in the last 12 months
- The year ahead
- You plan to make it available for at least 140 nights in the next 12 months
- Kind of stay
- Short, commercial lets. GOV.UK describes these as 28 nights or less
- Who decides
- The Valuation Office. You apply to it with a form; the switch isn't automatic
Once a home is on business rates, you're sent a form each year to confirm it still meets the test. If it doesn't, it moves back to council tax.
Since 24 July 2026, the past-year nights no longer apply where five or more units are valued together, or where the let is run with another business on the same land. A house or flat let on its own still needs them.
Which stays count
The 70 nights must be short, commercial stays. Nights you use the home yourself, or let it free to friends, don't count. GOV.UK describes the stays the test counts as 28 nights or less, so a longer stay may not add to the total.
That matters if a home takes a lot of month-long stays, such as contractors or families whose own home is being repaired. If those long stays don't count, it can be busy all year and still fall short of 70. It's worth knowing before you settle on the mix of stays, and we'll tell you which applies to yours.
How a business rates bill is worked out
England, 2026/27
- Rateable value
- Set by the Valuation Office from what a home like it should earn from letting, its type, location and facilities, and how many it sleeps. All values were reset on 1 April 2026.
- Multiplier
- The rateable value is multiplied by a figure in pence, set each year. Holiday lets can count as hospitality, which has a lower rate: 38.2p for a rateable value under £51,000, if the council agrees the home is wholly or mainly used that way.
- Reliefs
- Any relief is then taken off. For most single holiday lets, that's small business rate relief.
Small business rate relief in England
If you let only one property in England and its rateable value is under £15,000, you may qualify. At £12,000 or less, there are no business rates to pay. Between £12,001 and £15,000, the relief shrinks gradually from 100% to nothing.
The relief is meant mainly for one property. Owners with more can sometimes keep it, under stricter rules, so ask your council. In October 2026 the government also announced higher limits from April 2027 for retail, hospitality and leisure properties: £18,000 and £21,000. The regulations aren't published yet, so it's not yet clear how they'll apply to holiday lets.
If the home doesn't pass: council tax
A home that doesn't meet the test stays on council tax, or goes back to it. If it's furnished and nobody lives there as their main home, the council treats it as a second home.
Since 1 April 2025, councils in England can charge a second home premium of up to 100% extra, so up to double the normal bill. Each council chooses whether to charge it and must decide at least a year ahead.
Homes the premium doesn't apply to include
- Homes whose planning permission stops year-round living or allows holiday use only
- Homes being actively marketed for sale, or to a tenant, for up to 12 months
- Annexes treated as part of the main home
Planning conditions and short lets
Some homes were built with holiday-use or occupancy conditions. Our planning guide explains what they mean and how to check yours.
If your home is in Wales
Wales: business rates for a holiday let (checked 7 November 2026)
- Available to let
- At least 252 nights in the last 12 months
- Actually let
- At least 182 nights in the last 12 months
- The year ahead
- You plan to make it available for at least 252 nights in the next 12 months
- Averaging
- From 1 April 2026, you can use the average nights let over the previous 24 or 36 months
- Charity nights
- From 1 April 2026, up to 14 nights a year given to a registered charity count towards both numbers
A Welsh home that falls short pays council tax, and each council can add a second home premium of up to 300% on top of the normal bill. Homes with a planning condition limiting them to holiday use are among those exempt from the premium.
Small business rates relief in Wales is smaller: full relief up to a rateable value of £6,000, shrinking to nothing at £12,000, for up to two properties per business in each council area.
Letting a home in Wales
Our Cardiff page covers the local rules too, including the new visitor accommodation register and the city's visitor levy.
The honest downsides
- The nights must actually be let: a quiet year can move a home back to council tax
- Stays of more than 28 nights may not count towards the total
- You must apply, and confirm each year, so you need a record of every night let
- Business rates aren't always nothing: it depends on the rateable value and how many properties you have
- Wales asks for far more nights than England
A manager helps on both counts. A home listed on many booking sites and priced night by night has a better chance of reaching its nights. Your monthly statement itemises every booking, so the record is there when the form arrives.
Put the bill into your numbers
Our holiday let calculator takes your own nightly rate, occupancy, cleaning, bills and council tax or business rates, less the booking sites' fees, and shows your profit and the occupancy you need to break even.
Like a letting agent, but for short lets
HOMEHOSTS isn't guaranteed rent or rent-to-rent. We manage your home for you, and our fee is a share of what it earns.
This guide explains the rules; it isn't tax advice. The Valuation Office and your council make the decisions, and an accountant should confirm your own position.
The bottom line
A home let to guests often belongs on business rates, and with small business rate relief the bill can be small or nothing. A home that isn't let enough stays on council tax and may pay the second home premium. What decides it is the number of nights let, so a well-run let that fills its calendar has the better chance of business rates.
Ask for a free valuation: we'll tell you which bill applies to your home and show what it could earn as a short let, set against a standard rental.
Find out what your property could earn
Send us the postcode and a few details. We’ll call you with figures we can stand behind, and no pressure either way.