Professional self-catering businesses that PASC UK represents are less profitable than the casual observer might imagine. This is due to the combined effect of VAT and business Rates. The very great bulk of the self-catering sector falls below both the VAT threshold, and also falling below the new Business Rates threshold of an RV of £12,000 or less. Therefore, the majority of self-catering holiday accommodation in the UK pay no Business Rates and do not charge VAT.
This creates a vortex of tax for businesses above these thresholds. Bearing in mind that pricing is competitive, and that as like for like properties are let for approximately the same rate the following occurs:
Our guests might imagine that we are getting all the £1200, whereas in fact we are collecting £320 for the Treasury.