‘Loophole’ concerns in bid to tax holiday homes

DECISION-MAKERS on Anglesey are set to further increase the premium charged on holiday homes despite almost half of their owners threatening to exploit a tax “loophole” if the move is carried out.

A report will ask the council’s Executive to raise the levy on second homes from 35% to 50% next year, while planning to increase it to 100% by 2024.

The popularity of many coastal communities as second-home destinations has been cited as a major factor in the pricing out of many locals.

Anglesey in 2017 became one of the first authorities to bring in the council tax premium, with the proceeds targeted towards helping local first-time buyers. With 2,670 properties on the island currently paying the extra charge, it is estimated that increasing it to 50% would bring in an additional £500,000.

Most of the 1,390 consultation respondents felt more action was needed to stem the snapping up of second homes, with 67.5% stating that the current premium of 35% was too low, 14.6% feeling it was too high, and another 7% believing felt no premium should be charged at all.

But 45% of second-home owners said they would attempt to transfer their property to the non-domestic rates if the hike were implemented, while 30% would accept the premium, with the remaining 25% planning to either sell their property or rent it to a local.

Neighbouring Gwynedd Council already charges 100%, but several others, including Anglesey, have so far resisted amid concerns it could encourage more second-home owners to exploit a “loophole” to avoid paying the premium, or often any council tax at all, by “flipping” towards paying nondomestic rates. A transfer can be actioned if it’s proved that the property is available for up to 140 days in a year and actually let for at least 70.

But with most self-catering holiday accommodation being eligible for Small Businesses Rates Relief, it often results in no contribution at all into local authority coffers.

A decision is expected when Anglesey Council’s Executive meets on Monday.