You are here: Home - News -

Lords to table update to holiday let tax system

  • 09/11/2021
  • 0
Lords to table update to holiday let tax system
Legislation to stop people registering second homes as holiday lets to avoid council tax is set to be brought in.


Speaking at a debate in the House of Lords on council tax and second homes on Thursday, Baroness Thornhill asked if the government had plans to introduce a law to address this. 

Lord Greenhalgh said: “The government [has] confirmed that we will legislate to require that holiday rentals meet an actual letting threshold before being assessed for business rates.  

“This will ensure that only genuine holiday businesses can access the rate relief for small businesses. We will set out further details shortly in the government’s consultation response.” 

Greenhalgh said the state was “working very closely with the Treasury and the Valuation Office Agency to finalise the details of how and when this will be implemented”. 

A loophole has allowed people to register additional properties as self-catering holiday let accommodation, provided they let them out for short periods totaling 140 days or more per year.  

This means they can pay business rates instead and qualify for small business rate relief if they let out one property and the rateable value is less than £15,000. 

A relief of 100 per cent is available for properties with a rateable value below £12,000. 

A report by Colliers earlier this year revealed local councils in England and Wales were losing out on £110m due to homeowners paying business rates instead of council tax.

However, at the debate Greenhalgh assured that “96 per cent of second homes paid council tax in full” even if they used local services occasionally.  

He therefore suggested it was “reasonable” for properties which met the holiday let threshold to not pay council tax and be subject to business rates instead. 

He added: “It is perfectly proper, if you have a business, to be subject to the business rates regime. We have not yet finalised what that threshold will be. We are also consulting on whether there is a need for registration of these homes.” 

There are 0 Comment(s)

You may also be interested in