The Government has taken steps to close a tax loophole where people purchase a property, claim it's a holiday let to get business rates relief then never make the effort to let it out ...
Many of these properties would qualify for small business rates relief, which is a 100% relief from business rates, so no tax is due when the property has a rateable value of £12,000 or less, providing the owner only has one property to let. This relief tapers off depending on the value of the property.
The Government encourages holiday lets as it brings tourism and other local economic benefits, however, it is concerned that property owners are simply trying to reduce their tax liability by saying the property is available for letting, without actually letting it out.
Tough new measures are coming into force in April 2023 as they want to create a fairer system that will ensure second homeowners will contribute to the local services they are using so changes to the tax system are on their way.
From April 2023, properties will only be assessed for business rates rather than council tax if the owner can prove that:
- The property is available for letting for at least 140 days in the following year
- For the previous year, it was available for at least 140 days as well
- In the previous year, it was actually let for a minimum of 70 days
Evidence such as websites, brochures and receipts will be needed!
I feel these changes are quite fair and will only target those second property owners who attempt to take advantage of the tax system to avoid contributing to the local area by paying council tax.
Popular destinations such as Cornwall, the Lakes and the Isles of Scilly are heavily populated by second homes and closing this tax loophole will go a long way to helping the local economies of these areas.
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