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17/01/2022

Second-home loophole to be closed in England

Words: Laura Edgar
Loophole closed / Nikkytok_shutterstock_1193816059

Levelling up and housing secretary Michael Gove has announced that owners of second homes who ‘abuse’ a tax loophole by claiming they are holiday lets will have to pay up from next year.

Following a consultation on the proposed measures, changes to the tax system will go ahead.

Owners of second homes will have to pay council tax if their properties are not genuine holiday lets, said the government. The changes will target people who take advantage of the system so as not to pay towards local services in destinations such as Cornwall, Devon, the Lake District, Suffolk, West Sussex and the Isles of Scilly.

Concerns had been raised that people weren’t actually letting their second homes but left them sitting empty.

From April 2023, second homeowners will be required to prove holiday lets are being rented out for a minimum of 70 days a year to access small business rates relief, where they meet the criteria.

Evidence could include the website or brochure where the property is advertised for holiday let, letting details and receipts. Properties will have to be rented out for 140 days a year to qualify for this relief.

Gove said: “The government backs small businesses, including responsible short-term letting, which attracts tourists and brings significant investment to local communities.

“However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost.

“The action we are taking will create a fairer system, ensuring that second homeowners are contributing their share to the local services they benefit from.”

Kurt Jansen, director of the Tourism Alliance commented: “Establishing these new operational thresholds for self-catering businesses is welcomed by the tourism industry as it makes a very important distinction between commercial self-catering businesses that provide revenue and employment for local communities, and holiday homes which lie vacant for most of the year.

“It is recognition that tourism is the lifeblood of many small towns and villages, maintaining the viability of local shops, pubs and attractions.”

Image credit | Nikkytok, Shutterstock

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