Business Rates: Self-Catering Accommodation
Within the local tax system, properties used for the purpose of providing self-catering accommodation (for example holiday lets) are treated as businesses and are liable for non‑domestic rates, rather than council tax, subject to their meeting certain criteria set out in legislation.
Section 66(2BB) of the Local Government Finance Act 1988 (inserted by the Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2010 and amended by the Non-Domestic Rating (Definition of Domestic Property) (Wales) Order 2016) sets out the criteria for a property used to provide self-catering accommodation to be classified as non-domestic for local taxation purposes.
The current criteria (up to 31 March 2023) is as follows:
- In the 12 months prior to assessment, the property has been available for letting commercially as self-catering accommodation for short periods totalling 140 days or more; and
- during that period the short periods it has actually been commercially let for amounted to at least 70 days
Where the criteria has not been met the property is classed as domestic and is liable for council tax. Information on council tax for periodically occupied properties can be found at Council Tax Premiums - Powys County Council
A Welsh Government consultation seeking views on the operation of council tax premiums on second homes and long-term empty homes and the existing criteria for self-catering accommodation, and eligibility conditions for Small Business Rates Relief for self-catering accommodation ran from 25 August to 17 November 2021. Further details of the consultation can be found at Local taxes for second homes and self-catering accommodation | GOV.WALES
The Welsh Government has decided to amend legislation to set new thresholds of actually let and available to let. in order to be considered businesses and liable for non‑domestic rates, rather than council tax.
The Order makes amendments to Section 66 of the Local Government Finance Act 1988. The provisions amend subsection (2BB) by substituting new figures for the existing figures which correspond to either:
- In the 12 months prior to assessment, the property has been available for letting commercially as self-catering accommodation for short periods totalling 252 days or more; and
- during that period the short periods it has actually been commercially let for amounted to at least 182 days
The amended criteria will have effect from 1 April 2023 although the new eligibility rules come into force on 1 April 2023, for assessment purposes VOA will look at letting information from the previous operating year. It remains a decision of the Valuation Office Agency as to whether the above criteria has been met, or not, and they will advise the Local Authority as to whether a property is deemed a non-domestic or domestic property, for the purposes of local taxation.
Full details of the proposed changes can be found at Written Statement: Summary of responses: consultation on local taxes for second homes and self-catering accommodation (2 March 2022) | GOV.WALES
Further details on how the Valuation office Agency consider holiday let premises Business rates: Self-catering and holiday let accommodation - GOV.UK (www.gov.uk)