Owners of second homes who take advantage of a tax loophole by claiming their additional, often-empty, properties are holiday-lets will have to follow new measures, the Government has just announced.

From April 2023, second home owners will have to prove holiday-lets are being let out for a minimum of 70 days a year to access small business rates relief, where they meet criteria.

“Second home owners in England can currently avoid paying council tax and access small business rates relief by declaring an intention to let the property out to holidaymakers without having to prove they have actually done so.

Holiday-let owners will now have to provide evidence that they are within the rules, such as a website or brochure used to advertise the property, letting details and / or receipts. Properties will also have to be available to be rented out for 140 days a year to qualify (or continue to qualify) for this relief.

Michael Gove, Secretary of State for Levelling Up, said: “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.

Afford Bond Tax Director, Chris Regnauld commented: “Currently, around 65,000 holiday-lets in England are liable for business rates and around 97% of these have rateable values of up to £12,000. At the moment, there is no requirement for evidence to be produced that a property has actually been commercially let out, so this new legislation is going to please some, but obviously be an issue for others.”

The move will protect genuine small holiday letting businesses across the country and will support local economies by encouraging tourism and by ensuring second homeowners pay a fair contribution towards public services. Tourism can be the lifeblood for many small towns and villages, maintaining the viability of local shops, pubs and attractions, too.

The Tourism Alliance welcomed the change: They said: “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.”

If you need expert tax help or guidance with your property portfolio or business tax, please contact Chris.Regnauld@affordbond.com or use the Contact Us form on our website www.affordbond/contactus