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We have 6 cottages in Wales, converted from one large house,

Resolved Question:

We have 6 cottages in Wales, converted from one large house, 5 of the cottages are self catering holiday cottages and the 6th cottage we live in. Since we opened in 2004 all the cottages have been under our cottages council tax umbrella and not rated separately. (Band H) Now they want to rate them separately or have them under business tax if available more than 140 days or each let more than 70 nights. Our council tax is approx 3000 at the moment but if they where rated separately would be approx 1000 each. In the last calendar year they have been available for more than 140 days and have let more than 70 days ( each cottage) We have not paid income tax since we opened because of high running costs and expenditure. Some figures from the last three years are: (2011 income was 27769 total expenditure was 22617) (2012 income 42997 expenditure 41492) and (2013 income 35672 expenditure 28377) In 2012 and 2013 we had two solar systems installed which was part of the expenditure. We would like to know which route we should take, Council tax, and limit our letting season, or business tax and apply for small business tax relief? (I have started filling out the VOA "Request for Information" for Non-Domestic Rating with the figures above).The local rating office is giving us a choice on this but not saying if we would be eligible for business tax relief. Many Thanks Daniel Gwatkin


 


PS this is an email and  link the Inspector sent to me:


 


Mr Gwatkins 

We don't deal with any exemptions at the valuation office, these are dealt with by Powys Council, I have attached a link to their website that gives information on exemptions and small business rates relief 

http://www.powys.gov.uk/index.php?id=7550&L=0 


Thanks 


Alyn Evans
Property Inspector | Arolygydd Eiddo 
Council Tax Wales | Treth Cyngor Cymru          

Submitted: 3 years ago.
Category: Tax
Expert:  TaxRobin replied 3 years ago.
Hello,
Yes, your use of days and the time available to book does change your tax.
As they have given you the choice if you limit the available booking dates you will remain banded. If you do not limit then they will use the effective date which is the latter of date at which the property has been commercially available for 140 days, and a date on which
it has been let for 70 days in that year.

The site they sent you a link to describes the relief based on the value of the business.

You would also need to look at how many days past the 139 do you actually have bookings? Is there a season that is mostly used or are your bookings spread evenly through out the year? Would you lose significant revenue by limiting your booking dates?
Customer: replied 3 years ago.

Hello


Thank you for answering so quickly. Before writing to you, I had worked out that there are periods throughout the Spring Summer and fall that do not book well, like June and half of July and this has been consistent for many years. So looking at last year and closing for these different periods we could just be open for 130 days and still keep the busiest periods. I think I worked out between and the cottages and their bookings for last year, if we had closed for the periods in question we would have only lost 12 bookings in all. So do you think this is better than going down the business tax route? Would it be a lot more do you think? Local business rates with not relief at 45 pence in the pound I would say much more expensive! Am I correct in assuming this? But with our expenses does this not help us with applying for relief or does it have no bearing on business tax relief? Is it just worked out from how much your revenue is per cottage?


Many thanks


Daniel

Expert:  TaxRobin replied 3 years ago.
Yes, you stand to pay more under business.
The business tax relief may not help you as much as staying at your band rate.
Customer: replied 3 years ago.

Thank you Tax Robin


Okay so when you say " The Business Tax Relief" may not help me, I just wondered, is the rate-able value worked out from the revenue minus the expenses or just the revenue?


Sorry, this is the last question.


Many Thanks


Daniel

Expert:  TaxRobin replied 3 years ago.
The rateable value of a property represents its annual open market rental value not expenses.
I did not see anywhere that expenses or used to reduce.
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