How to Start & Run a B&B BandBED2eBook-1 | Page 33

and will generally be subject to less monitoring and regulation than business premises,
which will pay business rates instead of council tax.
The taxation of your property is determined by different criteria than those used by
planning; here it is not local impacts, but the scale of a property’s use as a business
which is relevant.
Again, there is a “primary use” test, but the difference here is that the department
concerned, the
Valuation Office Agency (VOA), has published some reasonably clear criteria for
differentiating between a B&B subject to council tax and one subject to business rates.
The following basic guide to the rating of guest houses and bed & breakfast
accommodation comes from the VOA:
What is a rateable value?
Every non-domestic property has a rateable value, apart from those properties that are
exempt from rates. The rateable value broadly represents the annual rent the property
could have been let for on the open market on a particular date, on full repairing and
insuring terms. For the current rating list, this date was set as 1 April 2003.
What factors may be taken into account in arriving at the rateable value?
In arriving at the rateable value, the actual rents which operators pay may be taken into
account. In addition other factors may also be taken into account such as:
• The number of bedrooms, whether singles, doubles or family rooms, basic or
ensuite
• Location and quality of the accommodation
• The presence of non-resident restaurant facilities
When is a Bed and Breakfast property domestic?
The property will be domestic and therefore subject to council tax rather than business
rates if:
• You intend not to provide short stay accommodation for more than six persons at
any one time within the coming year; and
• The property is your sole or main residence and the bed and breakfast use is
subsidiary to the private use
What factors are considered when applying the ‘subsidiary use test’?
The ‘subsidiary use test’ is to ensure, as far as possible, that whilst the provision of
limited short stay accommodation in a person’s own home will not be subject to rating,
this exemption will not extend to those where bed and breakfast is a significant business
enterprise.
1. Accommodation used
This is the amount of a property used for B&B at any one time; if half or more of
the whole house is used for guests at any time that property is likely to be rated.
2. Adaptation to a property
If adaptations carried out specifically to benefit guests alter the character of the
property beyond that of a private house, then the B&B use may not be subsidiary
and the property is likely to be rated.
Example: The installation of additional wash basins, bathrooms or ensuite
facilities, fire precautions such as fire doors, alarms and extinguishers.
[We would comment here that where building regulations require fire doors,
alarms and extinguishers even in a private dwelling (for example to provide a