Holiday Let Business Rates vs Council Tax: The 140-Night Rule Explained
One of the most common questions we get from owners in Bath and Bristol is whether their holiday let should pay council tax or business rates. The answer can make a difference of several thousand pounds a year — and since April 2025, getting it wrong can mean paying double council tax.
The short answer: if your property is available to let for at least 140 nights a year and is actually let for at least 70, it pays business rates. Many single-property owners then pay nothing, thanks to Small Business Rate Relief. If it doesn't meet the test and nobody lives there, it pays council tax as a second home. In Bath and Bristol, that means double council tax.
| Your situation | What you pay |
|---|---|
| You live there and let it occasionally | Normal council tax |
| Nobody lives there, meets the 140/70 test | Business rates (often reduced to £0 by relief) |
| Nobody lives there, fails the 140/70 test | Council tax plus a 100% second homes premium in Bath and Bristol |
The 140/70-night test
Since April 2023, a self-catering property in England is assessed for business rates only if all three of these are true:
It was available to let commercially for at least 140 nights in a 12-month period.
It was actually let commercially for at least 70 nights in the same period.
You intend to make it available for at least 140 nights in the next 12 months.
"Commercially" means at a normal market rate, with the intention of making a profit.
What doesn't count towards the nights:
Nights you or your family stay there
Stays for friends or family at a discounted rate
Nights the property is closed for repairs or refurbishment
Future bookings that haven't happened yet
Stays of more than 28 nights, which count as longer lets rather than holiday lets
That last point catches out owners who mix holiday lets with mid-term lets for contractors or relocations. A property that is mostly let on month-long stays can fail the 70-night test even if it is rarely empty.
Why 70 nights is the one to watch. Almost any genuinely available holiday let will clear 140 nights of availability. The risk is the 70 nights actually let: a new listing, a slow winter, a long refurbishment or heavy personal use can all push you under.
Business rates and Small Business Rate Relief
Once your property qualifies, the Valuation Office Agency (VOA) gives it a rateable value. Your council then sends a business rates bill based on that value.
The good news for most owners is Small Business Rate Relief:
Rateable value of £12,000 or less: 100% relief, so nothing to pay.
Rateable value between £12,001 and £15,000: relief tapers from 100% down to 0%.
Above £15,000: no relief.
Many flats and small cottages have rateable values well under £12,000, so a qualifying holiday let often pays no business rates or council tax at all.
The catch: owning more than one property. Relief is designed for businesses using one property. If you own several holiday lets, you can usually only keep it if each of your other properties has a rateable value under £2,900 and the combined total is under £20,000 (£28,000 in London). Most owners of two or more lets therefore pay business rates on each one. If you buy a second property, you keep relief on the first for a transition period (36 months if bought on or after 27 November 2025).
Business rates are still usually cheaper than a doubled council tax bill, but multi-property owners should include them in their numbers.
Where the second homes premium comes in
The second homes premium only applies to properties paying council tax. A holiday let on business rates isn't affected.
For council tax purposes, a second home is a property that is substantially furnished and is nobody's only or main home. A furnished holiday let that fails the 140/70 test fits that description exactly.
Since April 2025, councils in England have been able to charge up to a 100% premium on second homes. Both Bath & North East Somerset and Bristol City Council charge the full 100%, so a qualifying property pays double the normal bill.
Exceptions are narrow. The main ones are properties that are actively marketed for sale or long-term let (for up to 12 months), homes in probate, job-related homes, and seasonal homes where a planning condition stops anyone living there year-round. That last one covers some converted barns and cottages outside the city, but it rarely applies to a flat or townhouse in Bath or Bristol.
If you live there yourself. If the property is your main home and you let it while you're away, none of this applies. You pay normal council tax, with no premium.
What the difference looks like in Bath
Take a two-bed flat in Bath in council tax Band D, with an illustrative rateable value of £6,000. Bath & North East Somerset's Band D charge for 2026/27 is about £2,380.
| Scenario | Approximate annual bill |
|---|---|
| Meets the 140/70 test, owner's only property | £0 (Small Business Rate Relief) |
| Meets the 140/70 test, owner has several lets | £2,300–£2,600 in business rates |
| Fails the test, nobody lives there | £4,770 (council tax plus 100% premium) |
For a single-property owner, the gap between passing and failing the test is around £4,700 a year. That comes straight off your profit. In a larger property in Band F or G, it can be £6,900–£7,900.
This is why we advise owners not to block large parts of the calendar for personal use, and to take pricing seriously in quiet months. A few extra winter bookings can be the difference between qualifying and paying double.
How to move onto business rates
Let the property for a year first, or be confident you'll meet the test.
Keep records: booking confirmations, calendar availability and platform payout statements. The VOA can ask for evidence.
Apply to the VOA using its self-catering form, one form per property. Email it to selfcatering@voa.gov.uk or post it.
Apply for Small Business Rate Relief through your council once the property has a rateable value.
Tell the council that the property has moved off council tax.
If your property stops meeting the criteria, it can be moved back to council tax. Check your numbers every year.
Common mistakes
Assuming business rates apply automatically. They don't — you need to apply.
Counting personal and family stays towards the 70 nights.
Mixing in too many stays over 28 nights.
Not claiming Small Business Rate Relief once the rateable value comes through.
Forgetting that relief can be lost when you buy a second property.
Frequently asked questions
Does my Airbnb pay council tax or business rates? Business rates if it is available for 140 nights and let for 70 nights in a 12-month period. Otherwise council tax, unless you live there as your main home.
Do I have to pay double council tax on my holiday let in Bath? Only if it fails the 140/70 test and nobody lives there. Holiday lets on business rates aren't affected by the second homes premium.
What if my holiday let is new? A new listing won't have a full year's letting history. Talk to the VOA about your intended letting pattern and keep strong evidence from day one.
What if I own several holiday lets? Each property needs to meet the test on its own. Small Business Rate Relief is usually limited to owners with one property, so expect to pay business rates on each.For a single-property owner, the gap between passing and failing the test is around £4,700 a year. That comes straight off your profit. In a larger property in Band F or G, it can be £6,900–£7,900.
How we help
For the properties we manage, we keep calendars open, price to fill quieter months, and provide booking records whenever the VOA or council asks for them. If you own a property in Bath or Bristol and want to know whether it would qualify, get in touch.
Related reading: Short-term let regulations in England and How much can you realistically earn on Airbnb in the UK?
This article is general guidance, not tax advice. Figures correct as of September 2026.