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Two lots of Council tax or business rates?

 
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emmavix



Joined: 08 Jan 2016
Posts: 29

PostPosted: Sat Dec 24, 2016 8:34 pm    Post subject: Two lots of Council tax or business rates? Reply with quote

Not sure if anyone can help, we live in a former care home that has 16+ bedrooms. Our original plan was to operate this as a training centre but this may not be possible & we're now looking at using the 'spare' bedrooms (plus kitchen, bathrooms, lounge etc.) as a self-catering holiday let. It will sleep quite a few people depending on configuration & I suspect we could be above the business rates threshold depending on what rate they use for single bed spaces.

Initially we are looking at making it available probably just during school holidays so fewer than 140 days per year. What I can't figure out is whether we would pay one lot of Council tax on the whole building or Council tax on our home (at the front of the building, attached via connecting doors) AND separate Council tax on the holiday let part if we do this. Does anyone have any ideas?

Many thanks
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Nemo



Joined: 14 Aug 2008
Posts: 7004
Location: Norfolk

PostPosted: Wed Dec 28, 2016 11:55 am    Post subject: Reply with quote

I have no experience to draw upon but a quick google suggested this. Otherwise a phone call to your Council Tax office is your best bet with a general question perhaps? If you're in Scotland then different rules will apply too. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/435664/Council_Tax_Bands_and_Annexes.pdf
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newtimber



Joined: 24 Nov 2012
Posts: 1505
Location: Brighton

PostPosted: Wed Dec 28, 2016 4:13 pm    Post subject: Reply with quote

I think you should get professional advice as there may be all sorts of planning/building regulations and tax considerations.

For example, if the property is no longer solely your domestic residence, then there may be capital gains tax when you sell; building regulations may insist on fire prevention between the two parts of the property; the wiring may need changing so that your guests can turn the electric off at the mains/reset fuses etc in the event of an emergency; only having school holiday lets may need you to drain systems to prevent legionnaire's disease in the part of the property that is empty for a month or more at a time.
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emmavix



Joined: 08 Jan 2016
Posts: 29

PostPosted: Wed Dec 28, 2016 5:14 pm    Post subject: Reply with quote

Luckily the property was commercial when we bought it so I think we've sorted all the building regs, it's not deemed our main residence & already has fire doors throughout & separate electricity. The water will come from our own well so will be UV treated etc.

Thanks for the council tax info, that does seem to imply we'd either pay business rates or a second lot of Council tax so we'd be better off paying rates (and hoping they're under the small business threshold) and being 'open' all year.

So far we've had quite a bit of advice from the local Council & VOA but as we've been renovating & the property was deemed empty we need to get an assessment & start paying before they can actually tell us what we would pay, iyswim & that feels like quite a big gamble as we won't have income to pay the rates bill until we get some income.
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ianh100



Joined: 10 Jan 2013
Posts: 459
Location: Sherborne Dorset

PostPosted: Wed Dec 28, 2016 8:10 pm    Post subject: Reply with quote

I would agree with others that you need to get proper advice.

Is it classified as two properties currently or one? It sounds like this is one property and what you are suggesting would be more likely to look like a B&B than a furnished holiday let.

It makes sense to have a FHL under business rates if you only have one and it comes under the threshold. None of us know what that threshold will be for next year... or if the SBRR will continue as it has in the past. I have 2 small properties that currently qualify for SBBR on one property but the recent revaluation breaks that for me meaning a 150% increase in costs likely next year.

Also you need to consider that if you end up under Council Tax that this will most likely not cover your refuse as all waste associated with guests is "trade waste" and you have to pay for collection in addition to your council tax. Some councils allow a pro-rata rate if you only operate as a trade location for part of the year.

Hope things work out well for you, sounds and interesting project.
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emmavix



Joined: 08 Jan 2016
Posts: 29

PostPosted: Wed Dec 28, 2016 8:19 pm    Post subject: Reply with quote

It's currently one property with managers' (attached) accommodation, which we live in. There are dividing doors between our house & the guest rooms on each floor so it's separateable (now a word, sorry!) but technically attached! No plans to offer any food, there is a separate kitchen which we'd use for the remaining bedrooms, they'd have a kitchen, dining room, lounge & library.

I thought SBBR was now permanent at the new level?

Trade waste is OK, we can buy trade waste bags & have those collected so not a big issue for us but thanks.
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ianh100



Joined: 10 Jan 2013
Posts: 459
Location: Sherborne Dorset

PostPosted: Wed Dec 28, 2016 8:55 pm    Post subject: Reply with quote

Thank you. Looks like you are correct that the SBRR is now permanent.

However the recent business rates revaluation can and does impact who qualifies for it. I find my situation quite frustrating as the combined valuation is less than half that new limit we will probably no longer qualify.

The new business valuations are significantly higher, for us. This has gone from 2,500 to 3,500 for our main property and from 2,250 to 2,700 for our second. The limit for all additional properties is 2,600 so that 100 additional increase means we will probably loose all of our SBRR. I am happy to pay my fair share of taxation but these changes don't seem that fair. Assuming we still get a multiplier around 50% our tax bill will increase from 1,100 to 3,000. Our business income will not have changed at all......

As a holiday rental we pay for our refuse and don't use any local services. We just bring in more people to spend money in the local economy.

Perhaps I am too skeptical but these headline increases in allowance and permanent SBRR messages could hide a reality that the revaluations mean less people qualify and the Gov gets a bigger tax income. I do understand the budget pressure they are under.
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