Re-classifying a holiday let as a business

Agencies and other headaches, keys and cleaners, running costs and contracts...in short, all the things we spend so much of our time doing behind the scenes.<br>
Pengman
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Re-classifying a holiday let as a business

Post by Pengman »

Has anyone reading this re-classified their UK holiday let property as a business? The advantage of doing so is that, if the rateable value is assessed as less than 50,999 pounds then small business rate relief is applicable, if between 12,000 pounds and 15,000 pounds then a further reduction is applicable, and if under 12,000 pounds no business rates are payable. Rateable value is the rent the property could have been let for on the open market on a particular date, the current date being 1st April 2015. Seems to me that, for small holiday let properties anyway, we should all be doing it, shouldn't we?
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CarolineJ
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Post by CarolineJ »

Mine is, in Scotland. Pros - no council tax, 100% rates relief for small businesses. Cons - now have a business water bill (Scotland includes water in council tax) and have to pay for bin collections, but overall still lots better off.

Bear in mind (because this is about to hit us) that if you have more than one, the rules are different.

"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)"

https://www.gov.uk/apply-for-business-r ... ate-relief

What I take from this is that subsequent properties have no rate relief on them at all. I don't know whether your first property is always counted as your main property or whether you can nominate a subsequent purchase to be your main one.
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Cymraes
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Post by Cymraes »

The rules are also different in the different parts of the UK. In Wales you need a rateable value of £6000 or less for full relief and it's withdrawn completely at £12,000.
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greenbarn
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Post by greenbarn »

I think it’s a UK wide ruling, but certainly in England rubbish from a holiday let is classed as trade waste regardless of whether or not you’re on business rates, and you have to arrange and pay for suitable trade waste collection. Some areas seem fairly lax, some are tightening up.
akwe-xavante
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Post by akwe-xavante »

"and you have to arrange and pay for suitable trade waste collection"

Although this is true you can also legally dispose of the rubbish yourself. You don't legally require it to be taken away by someone else.

Purchase a waste carriers licence and find out where your nearest independent waste recycling business is. Visit or phone and find out what they charge. £1.20 inc vat for up to each 10kg of waste is fairly universal. Below 10kg will cost £1.20, 10.1kg and up to 20KG will cost £2.40. Prices do vary but only pennies per 10kg.

With a carriers licence which costs a little over £50 a year, a hard hat and reflective tabard (£20 for both max) you can legally process your own trade waste. You'll be given a Waste Transfer Note (Receipt) it's important to keep these for, i think its 2yrs maybe more but we need to keep them for 6yrs anyway (HMRC Rules).

The legal disposal of my own trade waste last year (The whole year) cost me less than £70!!!!! That's a HUGE saving and it's legal.

I do understand that this isn't for everybody, as it can be a tad unpleasant on rare occasions. I Double bag and drive with the windows open on my way to the recycle centre! 15min drive.

When challenged by your local council or the Environment agency about your waste and what you do with it, all they need are those Waste Transfer Notes you saved. If they stop you carrying trade waste, all you need to do is show them your carriers licence. Paying an extra I think it is £2 for a credit card style licence is well worth the money.

Not been stopped by the Environment agency yet but i have been challenged by the council about what i do with my waste. I emailed them copies of my Waste Transfer Notes. Heard nothing from them, not even an acknowledgement!!!!
Jonathan
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Post by Jonathan »

akwe-xavante wrote:"and you have to arrange and pay for suitable trade waste collection"

Although this is true you can also legally dispose of the rubbish yourself. You don't legally require it to be taken away by someone else.

Purchase a waste carriers licence and find out where your nearest independent waste recycling business is. Visit or phone and find out what they charge. £1.20 inc vat for up to each 10kg of waste is fairly universal. Below 10kg will cost £1.20, 10.1kg and up to 20KG will cost £2.40. Prices do vary but only pennies per 10kg.

With a carriers licence which costs a little over £50 a year, a hard hat and reflective tabard (£20 for both max) you can legally process your own trade waste. You'll be given a Waste Transfer Note (Receipt) it's important to keep these for, i think its 2yrs maybe more but we need to keep them for 6yrs anyway (HMRC Rules).

The legal disposal of my own trade waste last year (The whole year) cost me less than £70!!!!! That's a HUGE saving and it's legal.

I do understand that this isn't for everybody, as it can be a tad unpleasant on rare occasions. I Double bag and drive with the windows open on my way to the recycle centre! 15min drive.

When challenged by your local council or the Environment agency about your waste and what you do with it, all they need are those Waste Transfer Notes you saved. If they stop you carrying trade waste, all you need to do is show them your carriers licence. Paying an extra I think it is £2 for a credit card style licence is well worth the money.

Not been stopped by the Environment agency yet but i have been challenged by the council about what i do with my waste. I emailed them copies of my Waste Transfer Notes. Heard nothing from them, not even an acknowledgement!!!!
We just pay the local council £50 a year, much less hassle.

Jonathan
akwe-xavante
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Post by akwe-xavante »

"We just pay the local council £50 a year, much less hassle."

Seriously!!!!!!!!!!!!!!!!!!!!!!!!

My local council wanted, i think it was £450 to empty each bin weekly from Easter'ish to the end of October'ish can't remember exact dates.

It was going to cost me something just under a grand a year to have both done for just 6 months. Extra collections were going to cost me i think it was £15 a bin.

The local independent (Council Authorized) collector was a tad cheaper but not by a lot.

I now take my waste to the same local independent company myself for a fraction of the cost.
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greenbarn
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Post by greenbarn »

Good point about getting a licence to legitimately transport the waste yourself; it’s definitely not for everybody but worth investigating! If the council will collect trade waste for a paltry £50 a year, it’s a no brainer, but I suspect most of us are paying several hundred a year (around £600 in my case) for the service.
Pengman
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Post by Pengman »

Great comments from everyone above - I've learnt a lot. Anyone any idea how you initiate the reclassification of a property as a business? I've emailed my local Council but heard nothing so far.
I came, I saw, I bought it.
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Cymraes
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Post by Cymraes »

Pengman wrote:Great comments from everyone above - I've learnt a lot. Anyone any idea how you initiate the reclassification of a property as a business? I've emailed my local Council but heard nothing so far.
I ended up ringing the valuations office and they sent me the paperwork after me running round in circles trying to find out how. Certainly for Wales at least it can't be done on line.

They still haven't told me I'm re-rated. I assume I have been because the last 3 years council tax reappeared in my bank account and I had an email saying that the cottage had been deleted from the property register. Nothing at all from the business rates side of it!
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Nemo
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Post by Nemo »

Pengman wrote:Great comments from everyone above - I've learnt a lot. Anyone any idea how you initiate the reclassification of a property as a business? I've emailed my local Council but heard nothing so far.
Ring up the business rate department at the council. It's a completely different section to the Council Tax department. They then tell the local valuation office that you need to be valued for business rates. You'll have a form to fill in and quite possibly a long wait. The valuation office are busy people. I believe there's a revaluation happening now so they are getting in touch with all the existing businesses.

In terms of reclassification, it's not really optional; you either qualify for business rates through fulfilling the rules regarding available days; available to let for short periods that total 140 days or more per year, actually let for 70 days or you stay on Council Tax.
Jonathan
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Post by Jonathan »

Nemo wrote:
Pengman wrote:Great comments from everyone above - I've learnt a lot. Anyone any idea how you initiate the reclassification of a property as a business? I've emailed my local Council but heard nothing so far.
Ring up the business rate department at the council. It's a completely different section to the Council Tax department. They then tell the local valuation office that you need to be valued for business rates. You'll have a form to fill in and quite possibly a long wait. The valuation office are busy people. I believe there's a revaluation happening now so they are getting in touch with all the existing businesses.

In terms of reclassification, it's not really optional; you either qualify for business rates through fulfilling the rules regarding available days; available to let for short periods that total 140 days or more per year, actually let for 70 days or you stay on Council Tax.
I think you will find (at least in England) that it's 105 nights of actual lets.

Jonathan
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Nemo
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Post by Nemo »

Jonathan wrote:I think you will find (at least in England) that it's 105 nights of actual lets.

Jonathan
Hi Jonathon, no that’s not the case. In England we have the delight of two different rulings. The 105 days is to classify as an FHL for tax purposes. To qualify for business rates it’s the lower figure of actual lets of 70 days.
Pengman
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Post by Pengman »

For the record, i've now had my 2 bedroom, 4 person holiday let reclassified as a commercial property and have moved from Council Tax to Business Rates. It was assessed as having a Rateable Value of £2,700 (4 bed spaces @ £675 each) and as this is under £12k, I get 100% small business relief and have now received a Business Rates bill of £0.00. I've also had all the Council Tax I paid from the date I started trading (approx £750), repaid to me. So I'm well happy.
I came, I saw, I bought it.
Pengman
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Post by Pengman »

It's a year since I last posted on this thread. Since then the Council have been emptying my bins as if I was still paying Council Tax, but now they've caught up with me and either want to reclaim their bins and have me go elsewhere for a commercial waste collection service, or leave the bins and have me enter into an agreement with them to provide the same service they do at present, for about £300 per annum. I'd previously got a quote from a private waste company and that was nearer £1,500, so I'd like to bite the Council's hand off. The thing is though, in the agreement they've asked me to sign, it's me that's putting my head on the block in that I have to commit to complying with their recycling strategy. But of course, it's the guests that will actually do the recycling, not me, and how DO you get guests to recycle? - my experience is that a lot of guests don't recycle properly and some don't bother to recycle at all - I've lost count of the number of times I've had to take mouldy old dough out of cardboard pizza boxes etc etc!.

So I've asked the Council to help me help them by issuing me with (ideally) green (for approved) and red (for non approved) self adhesive stickers for the bin lids, making it abiundantly clear what is and what isn't approved. Plus the same information on a poster I can display in the property. Plus any other intiatives they may run to educate people to recycle properly. Not to much to ask is it? I wonder what response I'll get?

From my side, I'm thinking of making it a house rule that 'thou shalt recycle properly', and that guests who don't can expect any review I make of their stay to be downgraded accordingly. That said, I obviosuly have to make it very clear what I'm expecting the guests to do if I go this route.

Meanwhile I'm holding out on signing my agreement with the Council pending them offering me whatever assistance they can to persuade my guests to help me comply with my obligations under the agreement.

Anyone had a similar experience or wish to comment?
I came, I saw, I bought it.
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