How self-catering holiday lets are valued for business rates
Find out how the Valuation Office Agency (VOA) calculates rateable values for self-catering holiday lets.
Applies to England and Wales
How self-catering holiday lets are valued
Your self-catering holiday let must meet the eligibility criteria to be liable to pay business rates. If your property does not meet the eligibility criteria, you will be liable to pay Council Tax instead.
The Valuation Office Agency (VOA) usually works out the rateable value of self-catering holiday lets using fair maintainable trade (FMT). This is the annual level of trade your property is expected to achieve if operated in a reasonably efficient way. We calculate FMT based on property:
- income and expenditure
- type
- location
- facilities, such as a hot tub
We compare similar properties in similar locations to work out the FMT of different kinds of self-catering holiday lets.
After we have worked out the FMT, the VOA applies a set percentage to work out the rateable value. We use different percentages depending on if your property is a:
-
single property or complex of up to 4 properties
-
complex with 5 or more properties
Single units and complexes up to 4 properties
The VOA values single units and complexes of up to 4 properties by bed space for each property.
To work out the value of each single bed space, we first analyse trade to understand the annual net profit that a property has achieved.
We divide this profit to allocate a fair income for the business operator and a remainder, which represents the property’s rateable value.
We divide the amount of the remainder by the number of single bed spaces within the property to calculate a figure that represents the rateable value for each bed space.
If we have limited evidence of a property’s income and expenditure, we compare it to a similar property type with the same number of bed spaces to work out the rateable value.
Complexes of 5 or more properties
For self-catering complexes with 5 or more properties, the VOA bases the rateable value on a percentage of FMT. We separate complexes into one of 3 categories, A, B and C. The percentage we use depends on which category the complex is in.
Category A is for complexes with very good facilities, for example swimming pools, tennis courts and games rooms. These complexes are valued at 11% of FMT.
Category B is for complexes that are of average quality and have few facilities. Most complexes fall into this category and are valued at 13.5% of FMT.
Category C is for basic quality complexes with no facilities. These complexes are valued at 16% of FMT.
Category A properties have a lower percentage as the cost of running the property is likely to be higher. Category C properties have a higher percentage as they do not cost as much to run.