HELP US TO PLUG TAX LOOPHOLE ON SECOND HOMES
Gwynedd’s call to other councils as it lobbies Welsh Government to end ‘scandalous and unethical practice’
GWYNEDD council is hoping to enlist the support of other rural councils as it campaigns to close a legal loophole allowing holiday home owners to potentially avoid paying council tax.
The county contains more second homes than any other in Wales, with the authority having implemented a 50% levy on their owners since April 2018 in a bid to dampen their popularity.
The scheme has brought significant additional income to the authority’s coffers at a time when block grants are continuing to dwindle.
But concernsconcerns have beenbeen raised follow-ollowing thethe r e c e nn tt r e v e l a -tion thatt over the past three years, 768 h o m ee own e r ss ● have exploitedd aa loopholee byby registeringng theirtheir propertieses asas busi-businesses – which means they can potentially avoid paying anything to the council.
During Thursday’s audit committee meeting, Gwynedd’s chief executive confirmed that they were hoping to gain the support of eight other rural councils in pressing the Welsh Government to change the law.
Responding to a question from Llais Gwynedd’s Alwyn Gruffydd, who described the current situation as “a flaw in the law”, the finance portfolio holder admitted it was a “problem” for the authority.
Cllr Peredur Jenkins went on to say: “Unfortunately it’s currently outside our scope to do much, but we are commu- nicating with Cardiff Bay to try and change the law.
“I can assure you that pressure is being placed on the Government, although I haven’t been holding out much hope, I must admit.”
Chief executive Dilwyn Williams said: “I have agreed with the WLGA’s (Welsh Local Government Association) rural forum to present a report at their next meeting, with the data currently being collated.
“The aim is to show how much the public purse is missing out on due to the current situation and to see if the other eight authorities will join us in our campaign.
“It’s another tactic we can use as part of the ongoingongoing battbattle to furtherfurther presspre the issue.”issue.” AnyAny holidd a y hh oo m e s rr ee g i s - tetered as bb u s i - nnesses shshould ththeoretii cc a l l y paypay businessness rates, butbut ddo not havehave tto pay councilcouncil ttax as longlong asas theirtheir hholiday home is available to let for 140 days a year.
With many also eligible for small business rate relief, some end up not paying any tax on them at all.
Gwynedd are not alone in flagging up concerns over the loophole, with Anglesey’s deputy leader having also proposed a letter be sent to Cardiff Bay highlighting similar concerns.
Decision-makers have already proposed that the island’s existing 25% second home premium should increase to 35% in the near future.
Other than Gwynedd and Anglesey, the other authorities signed up to the Welsh Local Government Association’s (WLGA) rural forum are Conwy, Denbighshire, Ceredigion, Powys, Carmarthenshire, Monmouthshire, and Pembrokeshire.
Membership of the forum is dependant on the population density being below 140 people per km2.
Several of the counties have brought in their own premiums.
These vary from 25% in Ceredigion to 50% in Powys, Pembrokeshire and from April 2019, Denbighshire.
Last week, Arfon AM Sian Gwenllian also wrote to the Welsh Government calling for an “urgent review” and for a clampdown on second home owners “exploiting the system”.
She said: “Undoubtedly some second home owners contribute to the local economy, but many spend very little in our shops and businesses.
“To qualify as a business, the second home must be available to let for 140 days a year.
“How that is monitored is unclear and I hear stories of second home owners openly flaunting this rule, or ‘letting’ the property to family or friends.
“This is scandalous, and the loophole needs to be closed.
“Whilst this unethical practice is allowed to continue, I have constituents coming to see me desperate to move to social housing from unsuitable accommodation.”
In September, then First Minister, Carwyn Jones, expressed his view that the law was robust and that any changes would be down to the Valuation Office Agency, which comes under the UK’s HM Revenue and Customs.
But the UK Government’s Under-Secretary of State for Local Government, Rishi Sunak, acknowledged there was “scope for ambiguity” and confirmed that the situation was being investigated.