Holiday-let owners have a new way into business rates — from 24 July 2026, self-catering accommodation that forms part of a wider business, or that sits within a complex of five or more units, no longer has to satisfy the 70-day actual-letting test to be charged business rates rather than council tax. As chartered certified accountants in Guildford, Surrey advising self-catering and holiday-let clients across the UK, we set out what the new Non-Domestic Rating (Definition of Domestic Property) (England) Order 2026 changes, who it protects, and what owners should check before it takes effect.
Business Rates or Council Tax — and Why the Line Matters
Self-contained, self-catering accommodation is charged business rates instead of council tax where it is genuinely run as a commercial holiday let. Which side of the line you fall on has a real financial consequence. On the business-rates side, many small holiday lets qualify for Small Business Rate Relief and pay little or nothing. On the council-tax side, the property attracts a full council-tax band and, since April 2025, can be hit with a second-homes premium of up to 100% where the local authority has adopted one.
Since 1 April 2023, the gateway test in England has been strict. To be treated as non-domestic, a property must have been available to let commercially as self-catering accommodation for at least 140 days, and actually let for at least 70 days, in the previous 12 months, with the intention that it will be available for 140 days or more in the year ahead. Nights of private or discounted family use, and stays over 28 nights, do not count towards the 70.
What Changes From 24 July 2026
The Non-Domestic Rating (Definition of Domestic Property) (England) Order 2026 (SI 2026/692) amends section 66 of the Local Government Finance Act 1988. It keeps the 140-day and 70-day test as the standard route, but creates two new exceptions where that test no longer has to be met:
- Mixed-use business sites — where the self-catering unit is occupied together with land used for a different, non-domestic purpose and forms part of the same rateable hereditament. Think a holiday cottage on a working farm, or units attached to a pub, vineyard, activity centre or events venue.
- Complexes of five or more units — where the property is part of a single hereditament that includes five or more self-catering buildings or units, none of which is anyone’s sole or main residence. Holiday parks and cottage estates are the obvious examples.
In both cases, the 140-day availability and 70-day letting tests fall away. The change comes into force on 24 July 2026.
The Catch — What the Exception Does Not Do
The relief is targeted, not universal. A standalone single holiday let that is not part of a mixed-use site or a five-or-more-unit complex must still pass the full 140/70 test to stay on business rates. For a complex to qualify, the units must sit within one hereditament — treated as a single hereditament even where separated only by a highway — and cannot be occupied as anyone’s main home. The Valuation Office Agency can still ask for evidence that a property is genuinely part of a qualifying business or complex.
It is also worth separating two different rule changes. This Order is about local taxation — business rates versus council tax. It does not revive the Furnished Holiday Lettings income-tax regime, which was abolished from April 2025. The two sit in different parts of the tax system and need to be planned for separately.
Who Benefits — and Who Should Still Pay Attention
The clear winners are diversified rural and hospitality businesses: farms with a cottage or two, pubs and vineyards with guest accommodation, activity and wedding venues, and holiday-park operators. So too are newer complexes still building up occupancy, and properties in seasonal locations that cannot reliably evidence 70 let nights every year. For them, a single quiet season no longer risks tipping the property back into council tax and a possible second-homes premium.
Owners of single, standalone lets should not assume the pressure is off. For them the 140/70 test is unchanged, records still matter, and nights of personal or family use still cannot be counted. Anyone close to the threshold, or exposed to a local second-homes premium, should keep a careful letting diary.
What Holiday-Let Owners Should Do Now
- Check whether your unit is occupied together with other business land, or forms part of a group of five or more units — that is what now determines your route.
- Review how your property is listed by the Valuation Office Agency and whether the hereditament boundary reflects the wider business.
- Keep clear commercial records — booking platforms, invoices and an availability calendar — even where the exception applies.
- Model the numbers both ways: business rates with Small Business Rate Relief against council tax plus any second-homes premium.
- If you are near the 70-day threshold on a standalone let, plan availability and marketing before the year-end, not after.
Frequently Asked Questions
When does the new exception take effect?
The Non-Domestic Rating (Definition of Domestic Property) (England) Order 2026 comes into force on 24 July 2026 and applies in England.
Does my single holiday cottage now escape the 70-day test?
Not on its own. A standalone let that is not part of a mixed-use business site or a complex of five or more units still has to meet the 140-day availability and 70-day letting tests.
My cottage is on a working farm — do I still need 70 let nights?
If the cottage is occupied together with the farmland as part of the same rateable hereditament, the new mixed-use exception should apply, so the 70-day test would no longer be required. The Valuation Office Agency may still ask for evidence.
Is this the same as the abolition of the Furnished Holiday Lettings rules?
No. This change is about business rates versus council tax. The Furnished Holiday Lettings income-tax regime was separately abolished from April 2025.
How TaxDigit Can Help
We help holiday-let and self-catering owners work out which side of the business-rates line they fall, keep the records that support it, and plan the wider tax position. That includes tax advisory and planning, bookkeeping to evidence commercial letting, and year-end accounts for the trading side of the business. You can read the legislation in full in the Non-Domestic Rating (Definition of Domestic Property) (England) Order 2026.
Plan Ahead With TaxDigit
If you run a holiday let, a farm with self-catering units, or a larger complex, now is the time to check where you stand before 24 July 2026. Call us on 01483 230 777, email info@taxdigit.co.uk, or get in touch here and we will help you plan with confidence.