Government to close Tax loophole on second homes

Owners of second homes and holiday lets will no longer be able to avoid paying council tax and business rates …

Under current legislation property owners can avoid paying council tax on their second properties by registering them as businesses then stating they do not earn enough to require paying business rates. By registering for Small Business Rate Relief, if the property has a rateable value of £12,000 or less, the owners do not have to pay any tax at all, however following the ongoing campaigning from Cornwall Council and Cornwall’s who claim they loss out on approximately £10million a year as a result of holiday homes owners not paying council tax or business rates.

Government figures show there are 60,000 self-catering premises in England that are registered for business rates, 96% of which have a rateable value that means they are likely to qualify for Small Business Rates relief. It is not clear how many of these are second homes and how many are genuine holiday lets.

As a result, the government has announced plans to tighten the rules, forcing people who claim to be operating a holiday let to prove the property is actually let out for at least 140 days each year.

The move was included in the Government’s Tax policies and consultations publication.

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