Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in the Pink Book of Legislation, we regret that we cannot be responsible for any errors. This guide is not intended to be a definitive statement of the law in England. If you require precise or detailed information on the legislation mentioned in this guide, or on the legal implications for you in particular, you should consult a professional legal adviser.
- Business rates generally apply to bed and breakfast establishments unless the business does not intend to offer short-stay accommodation to more than six people simultaneously and you occupy part of the property as your only or main home and letting out the rooms is subsidiary to the use of the rest of the house as your home.
- Business rates apply to a self-catering establishment unless you offer short-term lets for fewer than 140 days a year.
- Only the part of the property used for business purposes is subject to business rates.
- Your local authority will calculate the business rates for your property based on its 'rateable value'.
Do I need to pay business rate?
Yes: if you are providing serviced or self-catering accommodation, unless:
- You qualify for Small Business Rate Relief, or
- For bed and breakfast:
- you do not intend to offer short stay accommodation to more than six people simultaneously, and;
- you (the owner) occupy part of the property as your only or main home, and; letting out the rooms is subsidiary to the use of the rest of the house as your home (‘subsidiary’ is based on factors such as the length of your season, the scale of modifications undertaken for guests and the proportion of the house you occupy). For example, if you only let only two of six bedrooms in your property as a bed and breakfast, business rates are unlikely to apply. However, if you let four of your six bedrooms, you will probably have to pay business rates. Your local authority will be able to advise you.
- For self-catering:
- you offer short period lets for fewer than 140 days a year. It is important to note that this is the period of the year when the property is available to be let, NOT the period over the year that it is let.
- Note: If you have to pay business rates, but use your property for business and domestic purposes (a composite hereditament), it is only the part you use for business purposes that is subject to business rates. The domestic accommodation is liable to council tax. Where parts of a house have a shared use, such as a kitchen or dining room, the Valuation Officer will visit the property and assess the amount to be paid (see below).
Small Business Rate Relief
From 1 April 2017 the Government has said it will permanently double the Small Business Rate Relief (SBBR) from 50 per cent to 100 per cent and increase the thresholds to benefit a greater number of businesses. Businesses with a property with a rateable value of £12,000 and below will receive 100 per cent relief. Businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief.