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business rates

Business rates for holiday cottage complexes

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business rates for holiday cottage complexes

Business rates are a burden for many businesses across the country.  With the recent emergence of the ‘sharing economy’ and an explosion of listings onto platforms such as AirBnB in recent years (there are more than 60,000 in London alone), many holiday cottage complex owners have been left looking over the fence at those offering accommodation free from the taxation they face in running their own tourism businesses.

Professional Association of Self Caterers (PASC UK) lobbying on business rates

In January 2019, the Professional Association of Self Caterers (PASC UK), who are the only association dedicated to lobbying on behalf of the sector across the UK, secured a change to the way that rateable values are calculated for some self-catering businesses throughout England and Wales after more than a decade of urging for adjustments to be made.

The alteration effects the percentages the Valuation Office uses in order to arrive at the businesses’ rateable value, with the result meaning a potential reduction of approximately one-third for many holiday cottage complex owners with five holiday letting units or above. 

As the owners’ input into the business is now taken into consideration, it’s set to potentially benefit those small businesses that manage both the bookings and the guest welcome themselves, and where the self-catering business is a primary income stream for the owners.

Further information on ratable values

You can find further information on how rateable values have been reduced and the potential impact on your own business rates here:  https://www.pascuk.co.uk/business-rates

Businesses should be able to apply for the reduction directly, with those successful able to claim back any overcharge to April 2017, when the current revaluation became effective.

Alistair Handyside MBE, who leads PASC and has been in the self-catering industry for more than 15 years said “Although this is a major breakthrough, it still leaves business rates too high for those self-catering businesses that do not benefit from the £12,000 threshold.  PASC UK continues to get futher change from the Valuation Office and the organisation is part of a wide group lobbying for fundamental change to business rates.” PASC UK is also working on a number of other areas that directly effect holiday home and complex owners including the reinstatement of inheritance tax relief for genuine tourism businesses and ensuring the sector is safe and legal. For more information about them please visit: https://www.pascuk.co.uk/

Guidance on insurance for holiday cottage complexes and quotes are available from the Boshers friendly team on 01237 429444.

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Holiday Cottage

Business Rates for Holiday Cottages

Holiday CottageRateable Values: Your Holiday Cottage

If we said 140 days to you would this seem a long period of time?

That’s a little over four and a half months or in terms of the tourism season, approximately the length of time between this year’s Easter Sunday and the return to the classroom of many children across the country in early September.

The vast majority of holiday cottage owners in England will have their properties available during this period and beyond. As a result the Valuation Office Agency (VOA) will assess them for a rateable value. A process which is used In order to establish the level of business rates for holiday cottages.

What is a Rateable Value?

The rateable value of a property is a professional assessment of the annual rent your holiday cottage could obtain. It’s a key factor used by your Local Authority to calculate the level of business rates you should be paying.

If your holiday cottage is let for more than 140 days in a financial year then it will be assessed for a rateable value.

What is taken into consideration when calculating the ratable value of your holiday cottage?

When assessing property such as offices, shops or other industrial premises there is a wide range of rental evidence from which Local Authorities can compare, contrast and establish rateable values.

The VOA explain that because very few locations have this level of rental evidence for holiday cottages they often need to use other methods in order to establish a ratable value, such as the gross receipts your cottage takes during the valuation period. This allows them to build a picture of the potential income your cottage could make and in doing so, establish what someone would otherwise pay in rent for the property.

They may also take into consideration the type, size, location and the quality of accommodation your property provides when making calculations.

How is this information gathered?

If you have a holiday cottage that should be rated then you’ll need to complete a ‘Request for Information’ form.

The V06048 form has been designed specifically for holiday cottages and self-catering units, with the questions designed to take into consideration differences in tariffs, marketing, levels of service and other factors such as quality of furnishings.

The overall aim of the form is to establish the income you gain from the property and the level of expenditure required to achieve that income.

What do you do if you believe that your rating is wrong?

If you believe the ratable value of your holiday cottage is incorrect you should contact your local Valuation Office. If you’re still unsatisfied with your rating you’re able to launch an appeal, which is known as making a ‘proposal’ to alter the rating list.

You can make a single appeal to the rateable value of your holiday cottage during the ‘life’ of the rating list, which usually lasts for five years (the current list runs from April 2010 to 31 March 2017).

To appeal against your listing you can visit www.voa.gov.uk or by obtaining a form from your local Valuation Office. Other points to note are that non-domestic rates or business rates are an allowable expense and therefore tax deductible for income or corporation tax purposes. Any owners accommodation should remain subject to council tax.

Boshers are specialist providers of insurance for holiday homes and cottages. For more information on how a specialist insurer can help and support your holiday home please give us a call on 01237 429444.

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