A Guide to Business Rates for Short-Term Lets & Serviced Accommodation UK

by MCPI Hosting

Please note: The information on this page is for general guidance only and does not constitute financial, legal or tax advice. We recommend speaking with a qualified accountant or professional advisor for advice specific to your situation.

Why Business Rates Matter for Short-Term Let Owners

Many Airbnb, serviced accommodation and holiday let owners in England continue paying Council Tax without realising their property may actually qualify, or legally need to be switched, to Business Rates instead.

Understanding how Business Rates work for short-term lets can potentially:

  • Reduce your overall running costs

  • Improve compliance with UK regulations

  • Help position your property as a professionally operated hospitality business

  • Unlock Small Business Rates Relief

  • Lead to refunds on previously paid Council Tax

As the serviced accommodation industry continues to grow across the UK, Business Rates are becoming an increasingly important topic for landlords, holiday let operators and Airbnb hosts.

Key Benefits of Business Rates for Holiday Lets

Potential Cost Savings

Many short-let owners qualify for Small Business Rates Relief (SBRR).

In England:

  • Properties with a rateable value below £12,000 are often eligible for 100% relief

  • Properties between £12,000 and £15,000 may qualify for partial relief

This means many serviced accommodation and holiday let properties pay either significantly reduced Business Rates - or none at all.

Potential Council Tax Refunds

In some cases, owners who successfully switch to Business Rates may receive refunds for previously paid Council Tax.

This will depend on:

  • The effective date of the VOA assessment

  • Your local authority

  • Your property's eligibility

Compliance with UK Regulations

If your property meets the criteria for Business Rates, you are generally expected to switch from Council Tax.

Operating under Council Tax when your property should be assessed for Business Rates could potentially lead to:

  • Backdated charges

  • Penalties

  • Compliance issues with local authorities or the VOA

Professional Recognition

Being listed under Business Rates can help demonstrate that your property is being operated as a legitimate short-term rental or hospitality business.

This may be viewed positively by:

  • Lenders

  • Insurers

  • Investors

  • Commercial partners

How Business Rates Work for Serviced Accommodation

The UK Government requires many self-catering holiday lets and short-term rental properties to be assessed for Business Rates rather than Council Tax if they meet certain criteria.

Generally, properties available to let for 140 nights or more per year may qualify for Business Rates assessment.

The Valuation Office Agency (VOA) uses a system called Fair Maintainable Trade (FMT) to determine the property's rateable value.

This assessment can take into account:

  • Number of bed spaces

  • Location

  • Local demand

  • Property standard and facilities

  • Estimated letting income

  • Occupancy potential

For example:

  • A well-presented two-bedroom serviced accommodation property in a high-demand tourist or contractor area may receive a higher rateable value

  • A smaller or lower-demand holiday let in a quieter location may receive a lower valuation

Common Myths About Business Rates for Airbnb

Myth 1: You should contact your local council to switch

Not usually.

The process typically begins with the Valuation Office Agency (VOA) rather than your local council.

The VOA is responsible for assessing whether your property should be moved onto Business Rates.

Myth 2: Business Rates are always cheaper than Council Tax

Not necessarily.

The outcome depends on:

  • Your location

  • Property size

  • Number of bed spaces

  • Rateable value

  • Relief eligibility

Some owners save money through Small Business Rates Relief, while others may not.

Myth 3: You can choose between Council Tax and Business Rates

In most cases, no.

If your serviced accommodation or holiday let qualifies for Business Rates under VOA rules, you are generally expected to apply accordingly.

How to Estimate Business Rates for Your Short-Let Property

You can estimate your property's potential rateable value by reviewing comparable serviced accommodation and holiday let properties already listed by the VOA.

Step 1: Visit the UK Government’s Non-Domestic Ratings List Search.

Step 2: Select Advanced Search

Step 3: Choose:

  • Special Category Code

  • 131 – Holiday Homes (Self Catering)

Step 4: Open Additional Filters

Step 5: Select your Local Authority

Step 6: Compare similar properties using:

  • Number of bed spaces

  • Property type

  • Location

  • Accommodation standard

Remember: The VOA looks at bed spaces, not bedrooms.

Once you have a comparable rateable value, you can use your local council’s Business Rates calculator to estimate your annual costs.

If your rateable value falls below the Small Business Rates Relief thresholds, your Business Rates bill could potentially be reduced substantially - or eliminated entirely.

Final Thoughts

Business Rates can be confusing for Airbnb hosts, serviced accommodation operators and holiday let owners - especially as regulations continue evolving across England and the wider UK.

Understanding how your property is classified is important not only for compliance, but also for maximising profitability and operating your short-let business professionally.

At MCPI Hosting, we work with landlords and investors across the UK to professionally manage serviced accommodation and holiday let properties, helping optimise occupancy, operations and guest experience.

If you’re considering switching your property to serviced accommodation or want support managing an existing short-let, feel free to get in touch with our team.