No, sorry, I still haven’t bought the house! I did email my solicitor last Monday to find out if there was a chance of getting the keys before Christmas, but haven’t had a reply yet, so hopefully that’s still a ‘Maybe’ rather than a ‘No’!
However, what I have been doing is looking into some of the things that are going to affect how much I earn from my holiday cottage and one of the main things I was a bit confused about is whether a holiday letting property is subject to council tax or business rates.
Disclaimer – I am not an expert and the below might be wrong!
From what I can figure out, and please remember that I’m looking specifically at the law for Scotland here, it all boils down to how many days the house is available for and how many it’s actually let for. The Scottish Government website is actually very helpful on the subject if you do a bit of digging. So, on this page, it says that if my holiday cottage is available to let for 140 days a year or more (which it will be – that’s only 20 weeks), then it will be rated as a self-catering property and liable to business rates.
The next burning question I wanted answered was how much is it going to cost me? Given that the council tax for our house is £113 a month (which does include water rates), I was pretty sure it was going to be more. I dug further and discovered that the local assessor will give me a rateable value for the house upon which I then have to pay the poundage rate, which for 2015/16 is 48p in the pound. At this point I was getting slightly worried – was that related to the value of the house? Surely they couldn’t be expecting me to fork out tens of thousands a year?
Fortunately not. I then found this EXTREMELY useful document on how ratable values for self-catering cottages (or castles!) are worked out. It’s dated 2004, so I’m not sure if the values are still in use, but it gives me some idea and based on the house sleeping 5, done to an H1 standard, and being in a remote (P) location, that would give us a ratable value of £1,025 – and that roughly tallies with the information I found on the SAA website that a 2-bed holiday cottage on the other side of the bay has a rateable value of £800.. So 48p in the pound means £492 a year in business rates, way lower than council tax. Result!
Then it got even better. It turns out that the Highland Council has something called the Small Business Bonus Scheme, which, if I understand it correctly, means that businesses with a total ratable value of up to £10,000 get 100% relief from rates – so I will pay nothing at all!
However, business rates don’t include water or refuse collection and I’ve been struggling to find out what I’ll have to pay for those. I’ve found an old PDF on the Highland Council website which seems to suggest that for a normal domestic 240l wheelie bin collected from household premises in 2010/11, it was £3.43+VAT per collection for a refuse bin and £1.64+VAT per collection for a recycling bin, but I can only see current prices if I apply for a collection. I am completely flummoxed by what happens about the water, I think I’ll have to ring up Scottish Water and ask! All in all, it does look like I’m going to be better off on business rates.