Can you be charged business rates in the uk for Airbnb lets?

[Jill174]

We have been doing Airbnb for 12 months and have just received an assessment for business rateable value  from the council for £1800 for the year! We only rent out one bedroom and this is a huge chunk our of our profit. Can they do this?

[Sarah2333]

So helpful. Thank you!

That should save me paying £3219 in Council tax per year as it looks as though I'm eligable for small business rates on Business rates.

[Tracey165]

Aberdeen city council set the RV of a 2 bed flat @ £8000. Because I have 2 it is over the £15000, so I am now only getting 25% discount. Also the water rates are over £100 pm per property as they base this on RV. I think this is going to kill my airbnb dead.

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[Paul8588]

How did you get round this?

[Mike-And-Jane0]

@Paul8588 be careful there is a lot of dated and/or incorrect info in this thread. What is your specific situation?

[Huma0]

@Mike-And-Jane0 

Which bits are now outdated or incorrect? I would be interested to know...

[Mike-And-Jane0]

@Huma0 Basically the rateable value of holiday lets is determined by the number of single bed spaces (so a 2 double bedded place is counted as 4). This value (say 6 for a typical 3 bed place) is then multiplied by an amount that varies depending on location. I think in Derbyshire it is £1000 so in my example you would end up with a rateable value of £6000. Now small business rates relief is applied as follows: 100% relief to £12,000 tapering to zero at £15,000. So in my example their is 100% relief. Note: The rateable value is not the rates you would pay without relief. Again if memory serves me correctly the actual rates on a £6000 rateable value is about £3000  but I have never concentrated on that number.

Next thing to note is that if you have more than 1 property then you only get a bit of relief UNLESS you are lucky and all the properties are in one building (or on one site?) All our apartments are in the same building so with 12 single bed spaces we have a rateable value of £12000 so just sneak in to 100% business rates relief.

[Huma0]

@Mike-And-Jane0 

Thanks very much for the info. I never thought that renting out rooms in your own home where you live would qualify for that. There is some tax relief applied which my accountant works out (I am a bit clueless about this stuff) but I definitely pay Council Tax, so I am pretty sure it has nothing to do with business rates. 

I'm not sure if it's worth looking into if you have to then pay for waste collection separately (to Thames Water). I already pay for water separately, so was confused by the conversation above, or is it just different rates for business and residential.

[Mike-And-Jane0]

@Huma0 Sorry but rooms in a home don't count - it needs to be a separate place AND it comes with downsides of having to pay Capital Gains tax on the increase in value of the apartments when we come to sell them.

Water for us is metered so it is easy to pay for that. 

[Huma0]

@Mike-And-Jane0 

Thanks. That is exactly what I always thought, but then this thread confused me. The first comment says, "On letting rooms in your home you become a B&B for business rates purposes and should inform the council when opening."

I suddenly thought, oh no, am I actually classified as a B&B?!

My accountant treats my Airbnb income the same as income from any other lodgers. Anyway, I am sure he knows what he is doing as he is very thorough and that's what I pay him for! 

Thanks for clarifying though. That puts my mind at ease. While the business rates relief sounds appealing, I would absolutely not want to pay Capital Gains tax on this property, which has already doubled in value since I bought it.

[Tracey604]

Hi - I am under the impression that you still pay capital gains tax wether you pay council tax or business rates. So surely you might as well try getting small rates relief. 
Please let me know if you have any further information.
Thank you. 

[Mike-And-Jane0]

@Tracey604 Yes you should pay CGT on a 2nd home irrespective of how it is rated.

[Matt4900]

Hi Mike and Jane....just picking up here on your last point regarding 2nd props.  Our council is telling us that because we now own two properties we don't get relief on the 2nd one and in 12 months we lose the relief on the 1st as well!  Annoyingly the 2nd property is owned 50:50 with another friend so if we'd applied for rates using the owner with only one Holiday Let perhaps we wouldn't have been penalised - what do you think does this sound right, I appreciate its a slightly unusual situation but any thoughts welcome

[Mike-And-Jane0]

@Matt4900 sadly I think the council is right. The rules say

If you use more than one property

When you get a second property, you’ll keep getting any existing relief on your main property for 12 months.

You can still get small business rate relief on your main property after this if both the following apply:

• none of your other properties have a rateable value above £2,899
• the total rateable value of all your properties is less than £20,000 (£28,000 in London)

I would call the council and ask if you can put the second property in the other owners name. They will know the rules and you might get lucky.

[Matt4900]

Very helpful  reply much appreciated 

[Man11057]

Thanks, very useful post, much appreciated