These FAQs come under a few headings: 

• Business Rates Threshold Changes, 
• Council Tax Premiums, 
• Tourism Levy; and 
• Registration/Licensing Scheme. 

Business rates threshold changes
 
Q. What is the change in business rates thresholds? 

For your property to be eligible for business rates, you have to show that, as at the date of the Valuation Office Agency’s (VOA) assessment form you complete, your property: 

• was available to be let for 252 days in the year to that date; 
• was actually commercially let for 182 days in the year to that date; and 
• is going to be made available to be let for 252 days in the following year from that date. 

Note, the period is just the 12 months up to the date you/the VOA are looking at it. It is not about how many days let in a financial year 1 Apr – 31 Mar. More information on reaching those thresholds and what to do when you is available on our business rates update here and a flowchart of the application process is here. 
 
Q. Do free stays for family/friends count towards the thresholds? 

No, lets have to be with a view to making a profit. Any non-commercial lettings, for example lettings to family and friends for free or for nominal amounts, should not be counted towards the thresholds.

Business Wales guidance (link here) notes: to be commercially “will usually mean the property being let at market rates and actively advertised; for example, using holiday cottage websites, estate agents, tourist boards, Visit Wales webpages.” 

Previously they’ve stated: “It is recognised that reduced low season price lettings may produce little or no profit but this letting may still be treated as commercial depending on the specific circumstances, for example the receipts could help towards the cost of maintaining the property during quieter periods.”  

As long as you are covering your variable costs e.g. laundry, energy and anything else incurred for that particular visit, and with at least a little going towards your annual fixed costs e.g. mortgage repayments, insurance etc, you could argue it is helping your profit margin for the year as a whole. So for example, assuming your property is actively advertised, if in winter months a couple of your bookings were where you gave a connected party a 25% discount from your peak rate, done on an arms length basis (e.g. asking guests to sign a basic set of terms with you and email them to confirm their booking), provided it’s still helping you make a profit for the year, it could be argued those bookings should be included. 
 
Q. Is renting to family or friends at a nominal rate breaking the law? 

No, but if you want those stays to count towards the thresholds you would need to disclose that rate on the VOA form (for which you are signing to say the information is accurate) and so it is better not to include those days in your 182 unless you rent to family/friends at a more commercial rate. 
 
Q. Is the threshold measured in nights or days? 

The legislation states it is days so 182 days and 252 days. A day counts if the booking covers just before midnight at the end of that day. E.g. a Fri pm to Sun am booking, only the Fri and Sat would count because just before midnight on the Sun the booking has already finished. 
 
Q. Can we average the number of let days across two or more properties? 

Yes, but only if the properties are situated at the same location or within very close proximity of each other as part of the same or connected businesses e.g. two cottages on the same farm. Even with the averaging option, the Business Wales guidance linked above states: "the commerciality criteria must be met. For example, if a property has only been let for ten days, this might meet the average requirement but not be considered as a commercial letting” and so not be eligible for business rates.

The guidance doesn’t explain the commerciality criteria but, linking back to the nominal rates point, we believe it likely means that each individual property at the business must on its own be aiming to be profitable i.e. a holiday let in its own right with a view to realising a profit and available to let for a commercial rate for at least 252 days a year. 
 
Q. If the property only just misses the threshold for business rates is there tapered business rates/council tax? 

If a property doesn’t qualify for business rates, it is liable for council tax instead. It is a hard and fast rule; there is no grading of it i.e. pay 50% business rates and 50% council tax. It's a switch to full council tax. 
 
Q. How will the Valuation Office Agency (VOA) continue to assess whether a property should remain on business rates? 

The VOA aim to assess short term lets that are registered for business rates at least once every two years. You are supposed to tell the VOA if you no longer meet the threshold in any rolling year since the date of your last assessment for rates. When the VOA assesses you it sends you a form (linked here) which asks for the minimum and maximum amounts you let out the property for and how many days it was available and let out.

It refers to the financial years (1 Apr - 31 Mar), partly because they also use this form to work out ratable value of properties, but feel free to put an asterisk and the days your property was let and available in the 12 months up to the date you're completing the form as this is what the law requires.

They invite you to provide evidence, but this is not mandatory. Once they receive your form, they could ask for evidence that you let it out as you say you did. Your Sykes/brand’s statements with accompanying narrative should be sufficient evidence but you should keep a record of any lets you organise instead, time your family or friends stay there for nominal amounts and keep evidence relating to those lets such as financial transactions in and out for the holiday let and emailed bookings. This all goes to help show the commerciality of the holiday let.
 

Q. I have been moved to council tax from 1 April 2023 because I didn’t meet the new 182 day threshold in 2022-3 – why? 

The increase in the thresholds from 140 days available and 70 days let to 252 and 182 apply to assessments made from 1 April 2023. 

So from that date, the test in those assessments is, in the 12 months previously, was the property available for holiday let for 252+ days and actually holiday let for 182+ days. 

The Valuation Office Agency (VOA) has assessed lots of properties to see what the position was on 1 April 2023. 

On that date, the 12 months previously is 1 April 2022 to 31 March 2023. Properties that only met the old 140/70 thresholds (and not the new 252/182 ones) on 1 April 2023 looking back 12 months, can be moved back to council tax as from 1 April 2023. 

For more information on what to do and how Sykes is engaging the Welsh Government and VOA on this issue, see here. 

Q. If the property meets the thresholds one year, does not meet them the next and then does meet them in the third year, will the property be in and out of business rates / council tax or is there some kind of relief? 

There is no published relief and the VOA would likely put the property on council tax for the middle year (so backdating the council tax for that year and cancelling your business rates bill for that year). If the VOA didn’t assess you until 3 years after their previous assessment, their view could well be that you should have notified them for the year you didn’t meet the threshold. So on any given day you need to check you meet the threshold for the year up to that date in case they assess you. You can see on the Sykes/your brand’s owner app/portal the number of days your holiday let has been booked in a certain period by going to "Bookings" and looking in the “Performance” box, change the “range type” to "custom range".
 
Q. What if my property doesn’t meet the threshold because of e.g. a pandemic? 

There are no published exemptions to the business rates thresholds and little sympathy has been had by the authorities for those who did not meet the threshold during the pandemic so the property would be liable for council tax. It would be the local authority’s discretion whether to remove or reduce any applicable council tax premium or even the standard council tax in those circumstances. Should you be on council tax in those circumstances you may want to call the local authority in which the property lies and ask them to reduce the council tax. 

If your property is flooded or for another reason requires or is undergoing major repair work or structural alteration it could be exempt from council tax for 12 months. 
 
Q. My property is currently on council tax but I am thinking of getting in touch with the VOA to move onto business rates. How do I do that? How much would business rates be? And when would the business rates be calculated from? 

You apply for your property to be moved to business rates once it meets both the 182 and 252 day thresholds by using this form. You can get an estimate of a business rates bill for your property at https://www.gov.uk/find-business-rates.  Note, you may qualify for small business rate relief which the calculator should tell you. If you don’t, there is 40% relief for hospitality businesses in place for 2024-5, capped at £110,000 per business, and it has been announced it will continue in 2025-6.  
The business rates would be calculated from the date you met both the 182 and 252 day thresholds. For more info, see our flowchart of the application process here.
 
Q. Does a late cancellation count towards the threshold? 

We have asked this question of the Local Taxation team at the Welsh Government (i.e. is this on the basis of a booking made or a booking actually taken) but they have said no, it is the let needing to be made and kept in place. If the let is cancelled it doesn’t count. (even if due to insurance, flexi-cancellation or otherwise, the owner has received payment). We've highlighted to Welsh Govt (to no avail) how unfair this is: the fact that a visitor decides to cancel a booking the day before doesn't make the business any less a business (goes to the heart of why the policy is unfair - pubs don't have to pull a certain number of pints a year to show that they're a business). We continue to engage government on this point. 
 
Q. If our property doesn’t qualify for business rates because it does not reach the thresholds, can we still offset our expenses? 

Whether your property is liable for business rates or council tax does not affect your ability to offset expenses as that is part of a different tax regime. You should speak to whoever usually advises you on tax issues or feel free to contact our preferred partner Zeal. See link here. 
  
Q. Is it worth applying for business rates for a holiday annex which is attached to our home? 

You should speak to an accountant or tax advisor, but if the annex is given its own council tax listing (separate to your home's listing), yes, you quite probably should apply for business rates for any part of property you’re letting out commercially as long as: 

• you meet the thresholds for days; and 
• you have permission to let out from a planning perspective. 

If your property doesn’t qualify for business rates, your council might exercise its discretion not to apply any council tax premium that applies in the area if the annex is not suitable for permanent living. See below for information on council tax premium exemptions.  
 

Council tax premiums
 
Q. What is the change in council tax premiums? 

Since 1 April 2023, for second homes, Welsh local authorities have been able to set council tax premiums of up to 300% (i.e. x4) of any council tax payable. 
 
Q. What is a second home for the purpose of council tax premiums? 

The second home premium is for properties that are substantially furnished and which are not your sole or main residence (whether or not your main residence is in the UK) so includes holiday lets that aren't on business rates. 
 
Q. When will we know whether a local authority is going to set a premium or increase their premium? 

The first time a local authority introduces a council tax premium it has to give a year’s notice ahead of the beginning of the financial year in which the premium will first apply. The financial year runs from 1 April to 31 March and so if a local authority wants to bring in its first premium for the 2026-27 council tax year it would need to have announced as such before 1 April 2025. 

Nearly all Welsh local authorities have introduced the premium. If any of those that have wants to increase it for a given financial year, it must announce it prior to that financial year (i.e. before 1 April) and as a public body should act reasonably and so announce in good time beforehand. 
 
Q. Are there any relevant exemptions to the council tax premiums on second homes? 

Currently, local authorities are not allowed to charge a premium in relation to a property where a planning condition: 

• prevents the occupancy of a property for a continuous period of at least 28 days in any one year period; 
• specifies its use as a short-term holiday let only; or 
• prevents occupancy as a person’s sole or main residence (whether on a holiday park or otherwise).  

Additionally, Welsh Government guidance (link here) provides that even if a self-catering property doesn’t fall within one of these exceptions the property might be considered unsuitable for permanent living and local authorities are encouraged to consider using their discretionary powers to reduce or remove the premium. This might be for properties such as: 

• outbuildings or barns converted to holiday lets as part of farm diversification; 
• annexes or garage conversions that form part of an owner’s primary residence; 
• lodges, caravans or chalets.  

So even if in theory you are allowed to live in the property all year, if it is not suitable for permanent living, the local authority has a discretion to reduce or remove the premium. 
 
Q. I currently pay business rates. What would the council tax bill be for the next two to three years for my property if it no longer met the business rates criteria?

Council tax itself normally increases by a few percent each year and so you could estimate what it might be for your property based on the band it would be in for the particular local authority in which it sits. It is hard to predict what the council tax premium might be for each local authority over the next few years. Those councils that have introduced premiums have tended to increase incrementally over a few years but that doesn’t mean local authorities wouldn’t jump to a high level from where they are now. Note that Pembrokeshire have actually lowered their premium from 200% to 150% from 1 April 2025.
 
Q. Does the applicability of building control regulations depend on whether the property is liable for council tax or business rates? 

No, the two systems are separate and building control inspections are supposed to assess a property based on its usage. 
 

Tourism levy
 
Q. Is there going to be a tourism levy? How will it operate?

Local authorities are able to opt in and it won't come into effect anywhere in Wales until 2027 as any local authority that wants to introduce it will have to consult before deciding, and then give 12 months notice following their decision, before it comes into effect in their area.

We continue to highlight the reasons a visitor levy is not sensible, in the press and with decision makers. 

Some of the key proposals as they stand are: 

How much would the levy be?
For all visitor accommodation except hostels and camp sites, £1.305 plus VAT per person per night. There was a proposal that individual local authorities would be able to apply a premium. Welsh Government has power to cap that premium. We have been lobbying against the premium and understand that the plan to enable individual councils to charge a premium has been paused. 

What about bookings already made?
Levy doesn't apply where booking is made before decision to introduce levy is made.  

When does levy apply? What if the stay is cancelled?  
Levy would apply at the end of the stay. If stay cancelled levy would need to be refunded.  

What is the levy going to be spent on?
If a levy is applied in the council area of your holiday let, the proceeds will be spent in that area; it’s intended to improve facilities and services for visitors so that they keep coming back. We argue a better alternative is to increase tax on empty homes and tax land-banking where new homes with planning permission remain unbuilt. 

How is the levy paid?
A return, and payment, would be made to the Welsh Revenue Authority, annually if owner takes less than £1k in levy (across all owner’s properties) or quarterly if more than £1k.  Returns and payment due 30 days after the end of the year/quarter.  

Whose responsibility is it to collect and pay? 
It is the owner’s responsibility. The draft law states that owners can arrange with a third party (such as Sykes) to collect and pay the levy. The detail of how this would operate is yet to be provided.  

What should I be doing now? 
Holiday let owners need not do anything at the moment. Many local authorities have said they have no plans to introduce the levy. Indeed, at the time of writing, we only know of Cardiff having definite plans to introduce it.

You can find more detail of the current proposals here. 

Registration/licensing regime
 
Q. Is there going to be a registration scheme? What would it look like? 

The Welsh Government are introducing a simple national register of all visitor accommodation in Wales including campsites, hotels, B+Bs, holiday lets etc, primarily to enable councils that introduce the visitor levy to collect it. It is expected to be in place in 2026, be mandatory, set nationally, ask for basic info, be free and take 5 minutes to register and enable automatic/instant approval of properties.

It is proposed that the Welsh Revenue Authority would set up a website. Owners would just provide:  

• their name and address (or if property owned by company the company name and address),  
• property address,  
• type of accommodation it is e.g. whole property, room in their home, yurt, shepherd’s hut, hotel etc.  
• Ministers could add more requirements in due course.  

There is no indication that the fundamental requirements to holiday let in Wales, such as health and safety, are going to change; simply that you would register (providing basic details about the property and owner) and then if a licensing scheme is introduced apply for a licence. 

Q. Is there going to be a licensing scheme? 

The current Welsh Government also want to introduce a licensing scheme for holiday lets from 2027. They have said they will introduce to the Senedd legislation for that scheme this Autumn. However, the legislation may not pass before the Senedd elections in May 2026 so it may not go ahead. We are feeding in our views to those designing the scheme and we understand the intention is for it to be relatively light touch.

In the meantime we continue to engage with decision makers to try to ensure the schemes are indeed proportionate (including as to any fee) as hoped. To prepare, you can make use of our health and safety system to store your health and safety documents. It contains links to laws, guidance and template documents, plus the system reminds you when documents are due for renewal. 
 
 

Planning 

Do I need to apply for planning permission to holiday let my property? 

It depends where it is. 

Since 20 October 2022, main homes, second homes and holiday lets are all in different planning use classes. A property can move freely between those different classes (this is called permitted development). 

However, a council can require planning permission for movement of a property from a main home to a second home or holiday let by introducing what’s called an “Article 4 direction”. 

Only two councils, Gwynedd and Eryri National Park, have already done so. Their Article 4 direction came into effect on 1.9.24 and 1.6.25 respectively. The Direction only applies to changes to a second home or holiday let after the relevant date for each authority area. 

So, properties already operating as a holiday let at that time are not affected by this (whether operated by you at that time or someone else) as long as their use as a holiday let has been continuous since then. Gwynedd Council have published a FAQs page on their website which you can find here. We responded to their consultation which you can find here. 

Are other councils thinking about bringing in an article 4 direction? 

Conwy Council cited staffing and cost as reasons for not introducing one. Most local authorities are waiting to see how Article 4 works in Gwynedd before deciding what to do. 

Where can I get planning advice specific to my property? 

For planning advice you can speak to expert planners such as ET Planning who offer a free 15 minute video consultation to Sykes and Brands owners. 

 

Please note that these FAQs do not constitute legal, tax or planning advice and should not be taken as such. As always, please read the relevant guidance, including the Business Wales guidance linked above and here yourself. Any summary or FAQs we prepare isn’t a substitute for reading background info and Business Wales’ guidance. Where we refer to a third party supplier, we don’t make any representations or warranties as to the competency, qualification, accuracy, reliability, suitability, of them or his/her/its details, offers, products or services or the lenders to whom they may refer you. If you choose to enter into any arrangement for the supply of goods or services of a supplier listed in these FAQs or links, you do so entirely at your own risk. Any such arrangement is between you and the supplier. We are not a party to it. We shall not be liable for any loss or damage arising under or in connection with any such arrangement or any action or decisions you take or do not take as a result of reading this newsletter or any loss suffered as a result.