From April 2023, new eligibility rules for business rates will apply to self-catering properties in England and Wales. These new rules will determine whether your property is eligible for business rates or Council Tax. The new rules will be used in assessments from 1st April 2023, and information about lettings during the 2022/23 operating year will be used to determine whether a property is eligible.

The rules differ depending on whether your property is located in England or Wales.

Let’s look at some examples of how the new rules will be applied:

Eligibility Rules for Properties in England

If your property is in England, to continue to be eligible for business rates, your property must meet the following criteria from 1st April 2023:

• It must be available for letting commercially for short periods that total 140 nights or more in the previous and current year.
• The property must have actually been let commercially for 70 nights or more in the previous 12 months.

Eligibility Rules for Properties in Wales

If your property is in Wales, to continue to be eligible for business rates, your property must meet the following criteria from 1st April 2023:

• It must be available to let commercially for short periods that total 252 nights or more in the previous and current year.
• The property must have actually been let commercially for 182 nights or more in the previous 12 months.

How the New Rules will be applied

The Valuation Office Agency (VOA) will be responsible for assessing whether a property meets the new eligibility rules. The VOA will consider whether the property was occupied immediately before midnight to establish whether a property was let on a certain night. For example, if a property was let out from Friday evening to Sunday morning, it would be considered let for two nights for the purposes of meeting the self-catering criteria.

Examples in practice

Let’s take a look at some examples.

Example 1: Property in England

A self-catering property in England has been let commercially for 100 nights in the previous 12 months. However, the property was available for letting for a total of 150 nights in the previous and current year. Based on these figures, the property would continue to be eligible for business rates.

Example 2: Property in Wales

A self-catering property in Wales has been let commercially for 200 nights in the previous 12 months. The property was available for letting for a total of 300 nights in the previous and current year. Based on these figures, the property would continue to be eligible for business rates.

In conclusion…

If you own a self-catering property in England or Wales, it’s important to understand the new eligibility rules for business rates.

Make sure you are keeping accurate records of when your property is available for letting and when it is actually let commercially. By doing so, you can ensure that you meet the new eligibility criteria and avoid having to pay Council Tax instead of business rates.

What’s the likely impact of these changes?

According to an article by the BBC, the new rules could result in thousands of self-catering properties across England and Wales losing their eligibility for business rates and being forced to pay council tax instead.

The article cites research by the Association of Scottish Self-Caterers, which found that around 30% of self-catering properties in Scotland were no longer eligible for business rates after similar rules were introduced there in 2017.

It’s expected that the impact in England and Wales could be similar.

The article also states that some self-catering property owners have expressed concern about the impact the new rules will have on their businesses. For example, one owner of a self-catering property in Wales told the BBC that she would have to increase her prices to cover the additional cost of council tax, which could make her property less competitive compared to other properties that are still eligible for business rates.

It’s worth noting that, as is always the case, the full impact of the new rules on the self-catering sector in England and Wales will not be known until they come into effect and are applied.

If you have a self catering property and are unsure how the new rules would affect you or are unsure of other implications around renting the property, please get in touch and we can talk you through the main points to consider.

Find out more here: Changes to business rates rules for self-catering properties – GOV.UK (www.gov.uk)