In England a holiday let pays business rates instead of council tax only if, in the previous 12 months, it was available for short commercial lets for at least 140 nights and actually let for at least 70, and it will be available for at least 140 nights in the next 12 months. Wales requires 252 nights available and 182 nights let, and Scotland requires 140 days available and 70 days let in the financial year. A property that fails is a dwelling for council tax and may face a second homes premium.

Why does it make a difference which tax a holiday let pays?

A holiday let that is rated as self catering accommodation is valued by the Valuation Office and billed business rates. GOV.UK notes that if you let only one property in England and its rateable value is under £15,000 you may qualify for small business rate relief, which can reduce the bill to nothing. A holiday let that fails the tests is a dwelling. It then pays council tax at the full rate because nobody lives there, and in many areas the council can add a second homes premium of up to 100% in England or up to 300% in Wales, explained in council tax premiums on second and empty homes.

The rating classification is a separate question from income tax. Since the furnished holiday lettings regime ended, holiday letting income is taxed like other property income, as covered in furnished holiday lettings after abolition, but the night counts below still decide which local tax you pay.

What are the tests in England?

The rule is in section 66(2B) of the Local Government Finance Act 1988. GOV.UK summarises it: a property in England is valued as self catering accommodation if all of the following apply:

  • you let it commercially for short periods of 28 nights or less;
  • it was available to let for short periods commercially for at least 140 nights in the last 12 months;
  • it was actually let for at least 70 nights in the last 12 months; and
  • you plan to make it available for at least 140 nights in the next 12 months.

The actual letting test was added by the Non Domestic Rating (Definition of Domestic Property) (England) Order 2022 from 1 April 2023. Before then, availability and intention were enough. The tests do not apply where the building is anyone’s sole or main residence, and the person whose intention counts is the freeholder or the leaseholder entitled to let it. Owners apply to the Valuation Office using a form and are sent a form each year to confirm they still meet the criteria. If they do not, the property moves from business rates to council tax.

What changed in England in July 2026?

The Non Domestic Rating (Definition of Domestic Property) (England) Order 2026 came into force on 24 July 2026. It keeps the forward looking 140 night intention test but removes the requirement to meet the previous year’s 140 night availability and 70 night letting history in two situations:

  • the accommodation is occupied together with non domestic property used for a different purpose and forms part of the same hereditament, for example letting units that sit within the same rating assessment as another business on the site; or
  • it is part of a hereditament that includes five or more self catering units which are not anyone’s sole or main residence.

Hereditaments separated only by a road count as one for both tests. A single cottage let on its own still has to meet the full history test.

What are the tests in Wales?

Wales has applied higher thresholds since 1 April 2023. Under section 66(2BB) the property must be available to let for at least 252 nights in the previous 12 months, actually let for at least 182 nights, and intended to be available for at least 252 nights in the coming year. Lets are short periods of 28 nights or less.

The Non Domestic Rating (Amendment of Definition of Domestic Property) (Wales) Order 2026 eased the test from 1 April 2026 in two ways. If the property was not let for 182 nights in the last year, the owner may use the average nights let over the previous two or three years. Up to 14 nights a year donated free to a registered charity’s beneficiaries can count towards both the 252 and the 182 figures. Section 66(2BB) also allows an average across several units at the same location, or in very close proximity, that are let as part of the same or connected businesses.

What are the tests in Scotland?

Scotland uses the Council Tax (Dwellings and Part Residential Subjects) (Scotland) Regulations 1992, amended from 1 April 2022 by SSI 2021/489. Self catering accommodation is excluded from council tax if it is intended to be available for commercial letting for short periods totalling 140 days or more in the financial year and has in practice been let for at least 70 of those days. The local assessor can ask for evidence of letting. A council may treat a property as meeting the 70 day requirement where exceptional circumstances prevented it and doing so is reasonable. When the letting requirement is not met, the entry is removed from the valuation roll from 1 April in the financial year in which it was failed.

How do the night counts work in practice?

Illustration only. An owner in Cornwall makes a cottage available on a booking platform for 160 nights between June 2025 and May 2026. Paying guests stay for 64 nights, and the family use it for a fortnight in August. Only commercial lets count, so the cottage has 64 qualifying nights and fails the 70 night test. When the annual Valuation Office form is returned the property is moved to council tax. If the same cottage were in Pembrokeshire, it would need 182 let nights, although from April 2026 an average over two or three years could help if a previous year was busier.

The same owner with six cottages in one rating assessment in England would, from 24 July 2026, need to show only the intention to make them available for 140 nights in the coming year.

What happens if a holiday let fails the test?

It becomes a dwelling for council tax. In England, a second homes premium cannot be charged on a dwelling whose planning permission prohibits permanent occupation, limits it to holiday use, or prevents occupation for more than 28 days in a row (Class L). Wales has an equivalent exception in Class 6 of the Council Tax (Exceptions to Higher Amounts) (Wales) Regulations 2015. In both cases the standard council tax charge still applies, so the planning condition protects only against the premium.

What mistakes do holiday let owners make?

  • Counting nights used by the owner, family or friends, or nights offered at no charge, as lets.
  • Applying the England thresholds to a property in Wales, or assuming Scotland uses a rolling 12 months rather than the financial year.
  • Not keeping booking records, platform statements and evidence of availability. The Valuation Office and Scottish assessors can ask for them.
  • Assuming small business rate relief follows automatically. It applies only if the property is rated and the usual conditions are met, which can fail where the owner has several properties.
  • Confusing the rating tests with the old income tax tests or with the rules for serviced accommodation, which are different.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.