UK holiday lets: council tax or business rating?

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Stephen
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Location: Northumbria/Cumbria Border / Florida
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Post by Stephen »

When we first started renting out our cottage about 6-7 years ago we did not ask for planning permission to rent it out, we didn't think we had to and have still not.

The council contacted us I think because we used to advertise in a scheme they ran relating to Hadrians Wall, telling us we were entitled to 50% discount on our council tax(small business rates) if we rented it out for more than 25 weeks a year and therefore a small business, we have been getting our discount for all these years with no problem, in fact we have just received a letter a couple of weeks ago from the Valuation Office asking us to send in the last 3 years accounts, which we have done, although this is the first time we have ever had to prove we are renting.

I think the Valaution Office must like to check now and again to see if people really are renting out. we also still get our rubbish & recycling bins emptied with all the other households in the area.

Local councils obviously operate differently from area to area, we are in Tynedale although we have a Cumbria postcode !!
http://www.tynedale.gov.uk/
Christine Kenyon
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Location: Glenridding, Ullswater Valley, Lake District, UK
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Post by Christine Kenyon »

Hello Stargazer. Hope the following helps ... some of it is a bit vague as I'm not sure what applies nationally and what applies locally and I don't know where you're based.

* If you let your property or it is available for less than 26 weeks you are not liable for business rates.

* We are in the Lake District National Park where there has just started to be talk about residential properties that are sold as potential holiday cottages having to have planning permission for change of use....but even if it happens, it's not for a few years yet.

* Like Stephen, we've had a letter from the Valuation Office asking for our income figures, expenditure on electricity, etc. Not sure what it's to do with them, but I contacted a few other folk and they've been asked for the same info for a number of years with no obvious side effects.

* Paying business rates can have advantages as in the UK you may be eligible for a 50% small business discount and the marketing grant which has already been discussed.

Hope all goes well for you.

Christine
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Overboard
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Post by Overboard »

We pay business rates for the Edinburgh properties, just as well, cant imagine paying the full tax rate for Edinburgh city centre, gulp. Trash gets picked up by the council along with everyone elses, so no problem there.
CHHL
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Post by CHHL »

Thanks all for your helpful replies. I'll let you know when I hear from the Council, hopefully it will be business rates with a reduction of 50%. It's just the planning permission aspect of it that got me, more money for the council, I don't know how much planning application's cost but it's another bill I could do without. I think I'll make more enquiries with the council about this.

We have spoken to the four neighbours in the area and they all seem okay about it, so hopefully everything will turn out ok.

Thanks again.

Carole
CHHL
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Planning for Change of Use

Post by CHHL »

Hi

Well the council sent an application form to me to complete with a fee of £306! Following this I wrote to the council asking for sight of legislation re change of use etc. They have now replied saying that they have looked into it further and that planning for change of use isn't actually required!! Unbelievable. Still waiting to hear about the council tax/business rates issue. :roll:
CHHL
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Council Rates

Post by CHHL »

Hi I have now heard from the council and will be paying business rates which are much less than council tax, plus there will be a further reduction for small business rates. Result.

Carole :)
Christine Kenyon
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Post by Christine Kenyon »

Good on you, Carol. This is good news :lol: . Business rates vs council tax is one of those areas where you need to know what the right question is to ask without giving away too much info about why you're asking!
CHHL
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Post by CHHL »

That's exactly right Christine, all's well that end's well. I love your cottages by the way, I hope my family and I are able to visit one day.

Carole
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Wonkeye
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UK holiday lets: council tax or business rating?

Post by Wonkeye »

I’m back again reopening this whole can of worms. After all the helpful comments, I felt fairly reassured …. until one of our neighbours mentioned in passing that his neighbour had to pay about 3 times as much in business rates on his small workshop as the council tax on his bungalow, and our local joiner told us at all costs to avoid business rates. I am in the throes of trying to research what rateable values are in the area of our cottage, but that doesn’t really give me helpful information on how we would be regarded as there are no self-catering units listed right in our village. (I assume that rateable values or the rates actually applied take into account the desirability of the actual location). The obvious thing would seem to be to go in to the council and have a friendly chat, but as Christine said: 'Business rates vs council tax is one of those areas where you need to know what the right question is to ask without giving away too much info about why you're asking!'

Regarding what some of were told about 26 weeks being a threshold for business rate liability, this seems to be in conflict with what I found on some government websites, namely 20 weeks. I don’t get this. Why would different official information be circulating? Do certain districts override national criteria?

Feeling reluctantly obliged to take a new look at the regulations, I found the following phrase somewhere on the Valuation Office Agency's website, at: http://www.voa.gov.uk/publications/publ ... tering.pdf

Question: If I let the property for less than 140 days in the year, am I still liable for a rating assessment?
Answer: If the property was available for letting throughout the year but the operator makes a conscious decision to only accept bookings for a total of 139 days or less, then the property will not be subject to a rating assessment but will be allocated a council tax band. Where the operator does not make a decision to limit the total period for which bookings will be accepted, the property will be liable for a rating assessment, regardless of whether actual lettings fail to exceed the 139-day limit in any given year. END OF QUOTE.

We don't really want to rent out much so that a) we can be there ourselves, but hopefully not exceeding an average of 90 days a years which would incur the risk and incredible complication of being classed as UK citizens for a given year and non-UK citizens for the rest, and b) we wouldn’t put too much of a burden on our quiet neighbourhood and put people's backs up. We had in mind 10-20 weeks a year, to at least satisfy the requirements for being classed as a business income-tax-wise and being able to deduct certain expenses from rental income.

Conclusion: on the one hand, to be able to deduct expenses from rental income, the property has to be AVAILABLE FOR AT LEAST 140 weeks but on the other, to not have to pay business rates, you have to make a conscious decision NOT to be available for 140 days or more. We could always insert on our website that bookings will only be taken up to 19 weeks, as I have noticed on one or two websites by googling specifically for this, …….. but then that would harm our endeavour to be classified as a business for income tax reasons. Can one be a business income tax-wise, yet still be a council-tax payer? Does the fact that they fall under different headings mean that they aren’t necessarily in conflict? Confused,
Wonkeye
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