Second homes council tax loophole now closed
If you own a second home, you may be aware that you can make council tax savings. Before April 2023, if you declared an intention to let the property to holidaymakers, you could avoid paying council tax and also access small business rates relief. However, government decided that this system was also a second homes council tax loophole. As a result, it has now closed it.
What is the second homes council tax loophole?
Government believes that many second-home owners declared an intention to let their property, but then failed to do so. This resulted in less council tax being paid to local authorities, not to mention lost revenue local businesses would get from holidaymakers.
Consequently, government launched a consultation called Business rates treatment of self-catering accommodation. This ran between November 2018 and January 2019. Government published its response in January 2022.
What are the changes to the holiday let rules?
Since April 2023, stricter rules now apply if you want your property to be assessed for business rates.
To qualify, you will need to supply evidence that the property:
- Will be available for letting as self-catering accommodation for short periods, totalling at least 140 days, in the coming year.
- Was available for letting in the same way for at least 140 days in the previous year.
- Was actually let commercially for short periods totalling at least 70 days in the previous year.
In a nutshell, if you want to qualify for small business rates relief and not pay council tax on your second home, then you need start planning for the upcoming tax year. If you can’t prove that the property was available to let for 140 days – and actually let for 70 days – then you won’t qualify.
Alternatively, if you don’t want to let out your home for the specified period, you may want to consider what to do next. Will an additional council tax bill make your second home too expensive? If so, is it worth selling it or even making it part of a new buy-to-let portfolio?
Advice for second-home owners
If you’d like advice on what to do with your second home, THP can help you. As the Accountants for Landlords, our friendly and expert team can guide you through the different options open to you – and help you make the best decision for your second home.
About Jon Pryse-Jones
Since joining THP in 1978, Jon Pryse-Jones has been hands on with every area of the business. Now specialising in strategy, business planning, and marketing, Jon remains at the forefront of the growth and development at THP.
An ideas man, Jon enjoys getting the most out of all situations, “I act as a catalyst for creative people and encourage them to think outside the box,” he says, “and I’m not afraid of being confrontational. It often leads to a better result for THP and its clients.”
Jon’s appreciation for THP extends to his fellow team members and the board. “They really know how to run a successful business,” he says. He’s keen on IT and systems development as critical to success, and he continues to guide THP to be at the cutting edge and effective.
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