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Home » News » News » Closing tax loophole on second homes

Owners of second homes in England who claim exemption from council tax by
reporting them as holiday lets will in future have to provide evidence of actual letting.
The current rules allow owners to pay business
rates instead of council tax if they simply
declare an intention to let the property. They
can also apply for small business rates relief,
and, if they meet the conditions, pay nothing
on properties with a rateable value of £12,000
or less.
From April 2023 only genuine holiday lets will be
eligible for small business rates relief. Owners will
have to provide evidence such as the website or
brochure used to advertise the property, letting
details and receipts in order to be assessed
for business rates rather than council tax. This
evidence will have to prove that:
■ The property will be available for
letting commercially as self-catering
accommodation for short periods totalling
at least 140 days in the coming year and
was also available for 140 days in the
previous year.
■ During the previous year it was actually
let commercially as self-catering
accommodation for short periods totalling
at least 70 days.
Around 65,000 holiday lets in England are
liable for business rates of which around
97% have rateable values of up to £12,000.
Small business rates relief will usually only be
available where the owner has only one holiday
letting property, although the relief is retained
for 12 months when the owner buys a second
property. Relief may also continue on the main
property if none of the additional properties
have a rateable value above £2,899.
In Scotland if a let self-catering premises is
available for 140 days or more a year it may
be liable for business rates. Similar changes to
those in England come in a year earlier over
the border, so from 6 April holiday lets must be
booked for a minimum of 70 days in a financial
year. The rules in Wales are currently under
consultation for similar amendments.

Image from Pixabay

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