Second-home council tax avoided

OWNERS of holiday homes in Gwynedd are using a legal loophole to avoid paying any council tax at all, a new report has found.

In 2016 the authority backed plans to double the amount of council tax paid by owners of holiday and longterm empty properties in a bid to halt their increase in popularity.

Figures released by Stats Wales last year showed there were 5,626 second homes in Gwynedd – more than double the number in Pembrokeshire (2,801) and dwarfing the figures for Conwy (1,473) and Anglesey (1,471).

But a new report published this week has revealed that Gwynedd Council could be missing out on much-needed revenue as holiday owners exploit a legal loophole to avoid paying any council tax at all.

The number of residents using this loophole has not been revealed, but any holiday homes registered as businesses should theoretically pay business rates, but do not have to pay council tax as long as the holiday home is available to let for 140 days a year.

It was initially thought that the additional levy, which came into effect in April 2018, could bring in an extra £7.4m in revenue as well as an additional £1.8m from charging the same on long-term empty homes.

This comes at a time when Gwynedd Council faces cuts worth £17.5m over the next three years.

But a report authored by the portfolio holder for finance, Cllr Peredur Jenkins, recommends that the authority should lobby the Welsh Government in order to close this loophole which sees potential funds diverted away from Wales towards the UK treasury.

“We are aware that some second home-owners manage to avoid paying council tax by transferring the property to a self-catering “business” but then receive small-business rate relief,” the report notes.

“This means that there is considerable loss to the public purse in Wales at a time when public funding is scarce. We have been discussing the matter on a national level with public bodies and other local authorities, and we will continue to keep an eye on the situation in future.”

However, the problem in not unique to Gwynedd, with the 2011 UK census showing that more than 165,000 Brits have a second home for holidays.