Cherilyn Mackrory, Member of Parliament for Truro and Falmouth has welcomed the news today that the Government is closing the controversial loophole that allowed some second home owners to get out of paying any rates at all on properties inaccurately registered as businesses.
Currently, owners of second homes in England can avoid paying council tax and access small business rates relief by simply declaring an intention to let the property out to holidaymakers. However, concerns have been raised that many never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break.
Following consultation, the government will now bring changes to the tax system, which will mean second homeowners must pay council tax if they are not genuine holiday lets.
From April 2023, second homeowners will have 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.
Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.
Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.
Cherilyn said:
“I care passionately about ensuring our housing crisis in Cornwall is addressed, and one of the things I have campaigned on since the time I was a Cornwall Councillor is addressing the unfair loophole that some people exploited to avoid paying rates on their second homes.”
“Today’s announcement by the Government helps address this and is a good step forward. There is a lot more to do though, and I will be working with my Cornish MP colleagues and Cornwall Council to continue to press the case for more powers for Cornwall Council to ensure second homes do not continue to negatively impact on our communities here in Cornwall.”
Secretary of State for Levelling Up Rt Hon Michael 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.”
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.
Around 65,000 holiday lets in England are liable for business rates of which around 97% have rateable values of up to £12,000. Currently there is no requirement for evidence to be produced that a property has actually been commercially let out.