Holiday home owners ‘avoid council tax as self-catering businesses’
OWNERS of holiday homes in Gwynedd are using a legal loophole to avoid paying council tax, a new report has found.
In 2016, the authority backed plans for a 50% rise in the amount of council tax paid by owners of holiday and long term 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 revealed 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 long as their holiday home is available to let for 140 days a year.
After allowing for exceptions, and changes in status or circumstances, council officers estimated that an additional revenue of £1.9m from second/holiday homes and a further £800,000 from long term empty properties would become available.
This comes at a time when Gwynedd council faces cuts worth £17.5m over the next three years.
But a report authored by the finance portfolio holder, Cllr Peredur Jenkins, recommends the authority should lobby the Welsh Government to close the loophole which sees potential funds diverted from Wales to the UK treasury.
“We are aware that some sec- Pictures: ARWYN ROBERTS ond home owners manage to avoid paying council tax by transferring the property to self-catering ‘businesses’, 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.
“Other methods of addressing the matter and equipping our Assembly representatives to pursue the matter should be considered.”
The problem in not unique to Gwynedd, with the 2011 UK census showing more than 165,000 Brits have a second home for holidays.
In January, St Ives MP Andrew George called for reform after talking of “industrial scale tax avoidance” and “preferential electoral influence” by second home owners in Cornwall.
In February, in response to the concerns Under-Secretary of State for Local Government, Rishi Sunak, acknowledged there was “scope for ambiguity” and said the situation was being investigated.