Council tax vs business rates

For topics that are specific to the UK and Ireland, please go here
User avatar
Robin S
Posts: 190
Joined: Tue Jan 20, 2015 9:24 pm
Location: The Cotswolds
Contact:

Council tax vs business rates

Post by Robin S »

Am i right in thinking if we want to classify our rental as a furnished holiday let we need to shift from paying Council tax -> Business rates?

R
User avatar
charles cawley
Posts: 1205
Joined: Tue Sep 21, 2010 1:53 pm
Location: Herefordshire, Shropshire, Borders

Post by charles cawley »

Depending on local taxes this can be effective.

100% small business rates relief could be available so you could end up not paying council tax and paying nothing for your rates.

But there are a few wrinkles covered in other threads relating to optional taxes levied by councils in certain areas. I am not certain of the practice in Wales or Scotland.
No web-site for now.
Advice about holiday letting
jenboyle1959
Posts: 224
Joined: Mon Apr 16, 2012 5:30 pm
Location: millport
Contact:

Post by jenboyle1959 »

I'm not sore if you HAVE to, but it's certainly cheaper in most cases.
To qualify as a FHL, you must have the property available for guests for 120 nights per year. It must be actually rented out for 105 nights. ( though you can average this between two or more properties.)
It's a fairly simple form to fill in, and once you qualify for business rates, which in our case was much cheaper than Council Tax anyway, we also qualified for full 100% relief on this ,under the Small Business Scheme.
We are in Scotland, so it's worth double checking your requirements with your local council, and the Joint Valuation Board( or it's English equivalent.
The only down side, is that you usually have to arrange your own refuse collection( though not in our case as there's no alternative on the island. :) )
https://www.gov.uk/government/uploads/s ... /hs253.pdf
this link may help you.
zebedee
Posts: 1270
Joined: Fri Sep 12, 2014 2:57 pm
Location: yorkshire dales

Post by zebedee »

Hello
The rules have changed recently. You need to have your property available for let at least 210 days and actually let for 105 days in the year. You cannot include any days that you use the property or any lets longer than 31 days

You will find more on the following guidance.

https://www.gov.uk/government/publicati ... tings-2015

There have been other very recent posts about this subject as well so it is worth doing some searches.
User avatar
charles cawley
Posts: 1205
Joined: Tue Sep 21, 2010 1:53 pm
Location: Herefordshire, Shropshire, Borders

Post by charles cawley »

Do these rules apply to business rating or to setting costs against revenue or both?
No web-site for now.
Advice about holiday letting
zebedee
Posts: 1270
Joined: Fri Sep 12, 2014 2:57 pm
Location: yorkshire dales

Post by zebedee »

Apologies I provided the link about the tax status.
The business rates.gov.uk site says

"If your property is in England and available to let for 140 days or more per year, it will be rated as a self-catering property and valued for business rates.

If your property is in Wales and both available to let for 140 days or more per year and actually let for 70 days, it will be rated as a self-catering property and valued for business rates.

The Valuation Office Agency works out the business rate based on the property type, size and location, and how many people can sleep in it.

‘Single bed space’ is the term used to describe how many people can sleep in the property.

Different rules apply in Scotland."

Now I have lost all credibility on the subject
:oops: :oops: just to say it would appear that you don't really have a choice about the business rates decision once you are actually seeking to let your property for a reasonable part of the year
brightmike
Posts: 169
Joined: Thu Feb 26, 2015 9:36 am
Location: Brighton

Post by brightmike »

I asked a similar question on here before and have now applied for business rates.

The lady from the council said she thinks the switch date would be the date of our first booking but she was not sure. We actually did some work on the property for a few months before we started letting it out. It would be nice if I could back date business rates to our purchase date rather than our first booking date.
Our property website can be found by looking at our profile.
jenboyle1959
Posts: 224
Joined: Mon Apr 16, 2012 5:30 pm
Location: millport
Contact:

Post by jenboyle1959 »

I don't think you can unfortunately Mike. I dated mine to my first booking too, but as it was unoccupied and having work done on it, in the way of renovations, I managed to get a reduction on the Council Tax that I paid for those " in between " months.I paid the council tax, but had a portion of it refunded.
User avatar
Nemo
Posts: 7062
Joined: Thu Aug 14, 2008 10:15 am
Location: Norfolk

Post by Nemo »

I went on to business rates right from the outset of owning my properties. Admittedly the refurbishment was pretty much finished when I purchased, but as my intention was to let it, I never went on to Council tax at all.
User avatar
Robin S
Posts: 190
Joined: Tue Jan 20, 2015 9:24 pm
Location: The Cotswolds
Contact:

Post by Robin S »

Thanks all (as usual!) for the advice. A genuine oversight by us that it seems may have a quite decent financial upside :)
User avatar
apexblue
Posts: 2249
Joined: Wed Sep 10, 2008 6:58 pm
Location: UK

Post by apexblue »

Robin you can get business rates backdated to when you started.
It is better to remain quiet and have one think you are stupid, than to open your mouth and remove all doubt....

The biggest mistake we make in life is thinking we have time.
Joanna
Posts: 1091
Joined: Thu Aug 23, 2007 3:12 pm
Location: Chester, North West England & Sidmouth, East Devon
Contact:

Post by Joanna »

If I remember correctly I didn't apply when we went over the required number of nights (simply forgot) and then when I was doing our annual tax return realised we'd gone over. I called the council who then backdated it to roughly the date that we went over and we got a refund of the council tax we'd paid since then which was an unexpected bonus!
Jo

Joint owner of Baker's Cottage in Chester & Chandler's Cottage in Sidmouth
rotaman
Posts: 34
Joined: Sun May 15, 2016 7:50 am
Location: denbigshire

Post by rotaman »

If the property has 'say' 4 or 5 bedrooms and can sleep 12 people would it be worth paying council tax appose to business rates? Roy
canal boating 'the fastest way to slow down'
russellt
Posts: 353
Joined: Tue Dec 09, 2014 8:03 am
Location: Ivybridge, Devon, UK
Contact:

Post by russellt »

rotaman wrote:If the property has 'say' 4 or 5 bedrooms and can sleep 12 people would it be worth paying council tax appose to business rates? Roy
It depends on the Rateable Value of the property. At the moment, small businesses attract Small Business Rate Relief of 100% for a single property valued at below £6001. Above that, and up to £12000, there is a sliding scale of relief via SBRR. Above £12k, you pay 100% of your liability.

(Remember, your liability is not the RV, but the RV x UBR(Uniform Business Rate - which is in the region of 45p in the pound).

As business taxes are being further devolved, it is important that you look at the exact situation in your devolved govt area.

The VOA website allows you to compare like properties so you can get an idea of what your liability might be, in order to compare it to Council Tax. However, remember that there are increasingly stringent rules on the definition, for tax purposes, of what is and isn't a holiday lettings business.

I get the feeling these rules, and the 3% stamp duty uplift, will be applied more forcefully in the coming years as more & more second home properties seek to be perceived as 'holiday lets'.
Web: https://yofftoo.com/property/esmes-cottage
Twitter/Facebook/Instagram: @esmescottage
LouLou
Posts: 6
Joined: Thu Aug 24, 2017 5:15 pm

Business Rates

Post by LouLou »

Joanna wrote:If I remember correctly I didn't apply when we went over the required number of nights (simply forgot) and then when I was doing our annual tax return realised we'd gone over. I called the council who then backdated it to roughly the date that we went over and we got a refund of the council tax we'd paid since then which was an unexpected bonus!


Hi, I have a holiday rental in Chester and looking into changing over to business rates but have read that We would have to organise for a company to collect our refuse, would you have details of the company you use or is it possible to still use the councils refuse collection. Any help/advice would be great. Thanks in advance
Post Reply