What Is a Holiday Let? A Complete UK Guide for Property Owners

This guide explains exactly what counts as a holiday let in the UK, how they are taxed, the legal and council rules you must follow, and what property owners need to know before buying, converting or advertising one.

What Counts as a Holiday Let in the UK?

A holiday let is a furnished residential property that is rented out to guests on a short-term basis for holidays, leisure, or short stays rather than long-term living. In the UK, holiday lets sit at the intersection of property law, tax law, local council regulation and business rules, making them very different from standard buy-to-let or residential properties.

Whether you are considering your first holiday let or already own one, this page is designed to give you clarity, confidence and compliance.

A property is generally treated as a holiday let when it meets all of the following conditions:

• It is furnished

• It is available for short stays, not long-term occupation

• It is marketed to the general public

• It is used for holiday or temporary accommodation

• Guests do not treat it as their main residence

Holiday lets can include:

• Coastal cottages

• City apartments listed on Airbnb

• Converted barns or annexes

• Serviced apartments

• Lodges, chalets and rural retreats

They can be owned personally or through a limited company.

Holiday Let vs Buy-to-Let: Key Differences

Feature	Holiday Let	Buy-to-Let
Rental length	Short-term (days or weeks)	Long-term (6–12+ months)
Furnishing required	Yes	Optional
Council involvement	High (planning, licensing, council tax)	Lower
Tax treatment	Business-style rules may apply	Standard property income rules
Guest rights	Very limited	Strong tenant protections

Is a Holiday Let a Business?

In many cases, yes.

Local councils, HMRC and lenders often treat holiday lets as a commercial activity rather than passive property ownership. This affects:

• Council tax vs business rates

• Planning permission

• Mortgage availability

• Insurance requirements

• Tax reporting obligations

If your property is regularly let to paying guests, it is usually considered to be run as a business.

Holiday Let Planning Permission Rules (UK)

Planning rules vary by location, but holiday lets are increasingly regulated.

England

• Many areas allow holiday letting under normal residential use

• Some councils restrict short-term lets via planning conditions

• London has a 90-night annual limit on short-term lets without planning permission

• New “short-term let control areas” may require specific consent

Wales

• Councils may require change of use

• Many areas now actively control holiday lets to protect housing supply

Scotland

• Mandatory short-term let licensing

• Registration and safety compliance required before advertising

Always check local council planning policy before buying or converting a property.

Council Tax or Business Rates?

Holiday lets fall into one of two categories, depending on how often they are available and occupied.

Property Status	Tax Charged
Available for short-term letting most of the year	Business Rates
Occasionally let / mainly private use	Council Tax

Properties charged business rates may qualify for Small Business Rates Relief, meaning the charge can sometimes be reduced to zero.

Stamp Duty on Holiday Lets

Stamp Duty Land Tax (SDLT) depends on how the property is bought, not how it is used.

Key points:

• Holiday lets usually attract the additional property surcharge

• Higher rates apply if you already own another residential property

• Buying through a limited company also triggers higher rates

• Mixed-use properties may have different treatment

Stamp duty planning should be considered before purchase, not after.

Tax on Holiday Let Income

Holiday let income is taxable, whether earned personally or through a company.

Personal ownership

• Income is declared via Self Assessment

• Profit is subject to Income Tax

• National Insurance may apply if activity is significant

Limited company ownership

• Profits subject to Corporation Tax

• More flexible expense and profit extraction options

• Higher admin and compliance costs

Buying a Holiday Let Personally vs Through a Limited Company (UK)

One of the most important decisions when buying a holiday let is how you own it. Buying in your personal name and buying through a limited company can produce very different tax outcomes, cash flow results and long-term flexibility.

There is no single “best” option. The right structure depends on income level, growth plans, funding method and how profits will be used.

Below is an in-depth comparison to help you make an informed decision.

Buying a Holiday Let in Your Personal Name

Personal ownership means you buy and operate the holiday let as an individual, even if it is run commercially.

How tax works

• Rental profits are taxed under Income Tax

• Rates depend on your personal tax band

• Profits are reported via Self Assessment

• National Insurance may apply if the activity is substantial and business-like

Allowable expenses

Most running costs can be deducted, including:

• Cleaning and laundry

• Repairs and maintenance

• Utilities and insurance

• Letting platform fees

• Professional fees

The tax calculation is relatively straightforward and familiar to many property owners.

Advantages of personal ownership

• Simpler structure and administration

• Lower accountancy and compliance costs

• Easier to extract profits (no dividend planning)

• Suitable for lower or moderate profit levels

• Often easier for first-time holiday let owners

Disadvantages of personal ownership

• Profits taxed at your marginal income tax rate

• Higher-rate and additional-rate taxpayers may face significant tax

• Limited flexibility in timing when tax is paid

• Less separation between personal and business risk

• Harder to retain profits for long-term reinvestment

Personal ownership often works best where:

• Profits are modest

• Income is needed personally

• The holiday let is a side venture rather than a scalable business

Buying a Holiday Let Through a Limited Company

Buying through a limited company means the company owns and operates the property, and you extract value through salary, dividends or loans.

How tax works

• Profits are subject to Corporation Tax

• Tax is paid by the company, not you personally

• Personal tax only arises when you take money out

This creates more control over timing and structure of tax.

Extracting profits

Common methods include:

• Salary (subject to PAYE and National Insurance)

• Dividends (taxed at dividend rates)

• Director’s loan repayments

• Retaining profits in the company

This flexibility is often the main reason people choose a company structure.

Advantages of limited company ownership

• Corporation Tax rates may be lower than higher-rate Income Tax

• Profits can be retained for future purchases

• Greater tax planning flexibility

• Clear separation between personal and business finances

• Often preferred for multi-property portfolios

• Can support long-term growth strategies

Disadvantages of limited company ownership

• Higher setup and ongoing costs

• Annual accounts, confirmation statements and filings required

• More complex tax planning

• Mortgage options can be more limited

• Lenders may require personal guarantees

• Stamp Duty higher rates usually apply

A limited company often suits:

• Higher earners

• Portfolio builders

• Owners planning to reinvest profits

• Those seeking long-term scalability

Stamp Duty Differences

Stamp Duty Land Tax (SDLT) is an important consideration at purchase.

• Limited companies always pay the higher residential rates

• Individuals may also pay higher rates if they own other property

• Mixed-use properties may be treated differently

• SDLT planning must be done before exchange

Once paid, SDLT cannot usually be recovered or restructured.

Ongoing Tax Efficiency: Key Differences

Personal ownership tends to be simpler but less flexible.
Company ownership tends to be more flexible but more complex.

Key distinctions include:

• Personal owners pay tax as profits arise

• Companies can defer personal tax by retaining profits

• Companies can smooth income across years

• Personal owners have fewer options to manage tax timing

The difference becomes more pronounced as profits increase.

Capital Gains and Exit Planning

When selling a holiday let, tax treatment differs:

Personal ownership

• Sale may trigger Capital Gains Tax

• Rates depend on income level

• Planning opportunities are limited once owned personally

Limited company ownership

• Company pays Corporation Tax on gains

• Additional tax may arise when extracting sale proceeds

• More planning options but higher complexity

Exit planning should be considered before purchase, not at sale.

Risk, Liability and Perception

A limited company provides:

• Legal separation between you and the property business

• Clearer commercial structure

• Often a more professional perception with suppliers and lenders

Personal ownership:

• Is simpler

• But exposes personal assets more directly to business risk

Insurance remains essential in both cases.

Common Mistakes to Avoid

• Choosing a structure based solely on tax rates

• Ignoring long-term plans

• Underestimating admin costs

• Buying personally when profits will be retained

• Buying through a company for a single low-profit property

• Not reviewing structure as income grows

What works in year one may not work in year five.

Which Is Better: Personal or Limited Company?

There is no universal answer.

In simple terms:

• Lower profits, simplicity, personal income → Personal ownership

• Higher profits, reinvestment, portfolio growth → Limited company

The right choice depends on:

• Your tax band

• Expected profit levels

• Financing structure

• Long-term goals

Making the right decision at the start can save tens of thousands of pounds over the life of the investment.

A holiday let is not just a property — it is a commercial activity with long-term consequences. Ownership structure affects tax, cash flow, risk and flexibility.

Professional advice before purchase is almost always more valuable than trying to fix the structure later.

Allowable Expenses for Holiday Lets

You can usually deduct wholly and exclusively incurred costs, including:

• Letting platform fees (Airbnb, Booking.com)

• Cleaning and laundry

• Repairs and maintenance

• Utilities (gas, electric, water, Wi-Fi)

• Insurance

• Replacement of furniture and appliances

• Marketing and photography

• Accountancy and legal fees

Good record-keeping is essential to maximise reliefs and defend claims if reviewed.

Safety and Legal Requirements for Holiday Lets

Holiday let owners have clear legal responsibilities, including:

• Gas Safety Certificate (if gas installed)

• Electrical safety checks

• Fire safety measures (alarms, extinguishers)

• Furniture fire-resistance compliance

• Legionella risk assessment

• Public liability insurance

Failure to comply can lead to fines, bans on advertising, or insurance invalidation.

Advertising a Holiday Let in the UK

Successful holiday lets rely on professional marketing.

Best practices include:

• Listing on major platforms (Airbnb, Booking.com, Vrbo)

• High-quality photography

• Accurate descriptions and house rules

• Transparent pricing and fees

• Fast guest communication

• Clear cancellation policies

Local council licensing numbers may be required before advertising in certain regions.

Common Holiday Let Mistakes to Avoid

• Buying without checking planning restrictions

• Ignoring council tax or business rates classification

• Underestimating running costs

• Poor guest screening

• Inadequate insurance

• Treating it like a normal rental property

Holiday lets can be profitable, but only when properly structured and compliant.

Is a Holiday Let Right for You?

Holiday lets suit owners who:

• Want higher potential returns than long-term rentals

• Are comfortable with active management

• Understand seasonal income fluctuations

• Are willing to meet regulatory obligations

They are not passive investments, but when done correctly, they can be highly effective.

Final Thoughts: What a Holiday Let Really Is

A holiday let is not just a property you rent out short-term.
It is a regulated business activity with tax, legal, council and safety responsibilities.

Understanding these rules upfront protects your income, your investment and your peace of mind.

If you are planning to buy, convert or already operate a holiday let, professional advice at the start often saves significant cost and stress later.