Con­sul­ta­tion launched as min­is­ters re­view sec­ond-homes tax loop­hole

Western Morning News (Saturday) - - News - BY RICHARD WHITE­HOUSE Lo­cal Democ­racy Re­porter

The Gov­ern­ment has launched a con­sul­ta­tion as part of a re­view of tax rules for sec­ond homes af­ter cam­paign­ing by Corn­wall coun­cil­lors and MPs.

There have been calls for changes to close a loop­hole which has seen some sec­ond home own­ers avoid pay­ing ei­ther coun­cil tax or busi­ness rates on their sec­ond homes.

Sec­ond home own­ers have to pay coun­cil tax un­less they de­clare their homes as be­ing let for hol­i­day use and reg­is­ter them as busi­nesses.

They then have to be reg­is­tered for busi­ness rates, but most qual­ify for small busi- ness rate re­lief for hav­ing a rate­able value of £12,000 or less. By do­ing this, sec­ond home own­ers avoid pay­ing any tax at all.

It has been re­ported that up to 6,000 prop­er­ties in Corn­wall are us­ing this loop­hole, which means that Corn­wall Coun­cil is miss­ing out on up to £10m in un­paid taxes.

An­nounc­ing the start of the gov­ern­ment con­sul­ta­tion, Lo­cal Gov­ern­ment Min­is­ter Rishi Su­nak said: “We’re aware of con­cerns that the cur­rent ar­range­ments for valu­ing sec­ond homes for busi­ness rates and claim­ing re­lief do not pro­vide strong enough pro­tec­tions against abuse.

“We are seek­ing views on whether we should strengthen the checks al­ready in place to en­sure sec­ond-home own­ers have to pay coun­cil tax, while en­sur­ing gen­uine hol­i­day let busi­nesses are able to demon­strate they are el­i­gi­ble for busi­ness rates re­lief.”

The con­sul­ta­tion will seek views on whether the cur­rent cri­te­ria should be strength­ened to en­sure sec­ond home own­ers are con­tribut­ing to the lo­cal econ­omy through the proper pay­ment of coun­cil tax, or, for those gen­uinely rent­ing out their prop­erty and sup­port­ing tourism, busi­ness rates.

The re­view has been wel­comed by St Austell and Newquay MP Steve Dou­ble who has been call­ing for changes to be made.

He said: “It is right that ev­ery­one should pay their fair share of rates. That some hol­i­day home own­ers have ex­ploited loop­holes to avoid pay­ing their way while still ben­e­fit­ing from lo­cal gov­ern­ment ser­vices is wrong, and some­thing I have raised at all lev­els of Gov­ern­ment in Par­lia­ment as well as meet­ing with Min­is­ters to dis­cuss what more can be done.

“I am pleased to see this com­mit­ment to a con­sul­ta­tion, a first step to what I hope will re­sult in a change for the bet­ter for coun­cil tax pay­ers in Corn­wall. I await the con­sul­ta­tion with in­ter­est and will con­tinue to do all I can to en­sure change on this is­sue hap­pens as soon as pos­si­ble.”

Some parts of Corn­wall have been at­tempt­ing to re­duce the in­crease in sec­ond homes by bring­ing in new rules.

Ar­eas in­clud­ing St Ives and Me­vagis­sey have in­cluded poli­cies in their neigh­bour­hood plans which state that no new build homes should be sold as sec­ond homes.

‘It is right that ev­ery­one should pay their fair share’

MP Steve Dou­ble

More than 3,500 sec­ond homes were bought in Corn­wall last year – ac­count­ing for 27% of all prop­erty trans­ac­tions in the county.

The fig­ures have been re­vealed by Her Majesty’s Rev­enue and Cus­toms (HMRC) as part of sta­tis­tics re­leased around stamp duty.

They break­down how many prop­er­ties have been bought as “ad­di­tional dwellings”, which could be used as sec­ond homes or as buy-to-let prop­er­ties.

It shows that in 2017/18 3,510 prop­er­ties were sold as ad­di­tional dwellings in Corn­wall, which is 27% of all prop­er­ties sold in the county.

They had a com­bined value of £987mil­lion, giv­ing them an av­er­age value of just over £281,000 each.

This com­pares to the pre­vi­ous year, 2016/17, when 2,940 prop­er­ties were sold as ad­di­tional dwellings which was 24% of the mar­ket and val­ued at £781m.

The rise in sec­ond home sales has come de­spite the Gov­ern­ment in­creas­ing stamp duty for prop­er­ties bought as sec­ond homes by 3%.

In Corn­wall, there have been mea­sures im­ple­mented to try to pre­vent more homes from be­ing sold as sec­ond homes.

Sev­eral ar­eas, in­clud­ing St Ives and Me­vagis­sey, have in­cluded poli­cies in their neigh­bour­hood de­vel­op­ment plans which state that any new homes built can­not be sold as sec­ond homes.

In 2013, the Gov­ern­ment al­lowed a re­duc­tion of coun­cil tax dis­count on sec­ond homes, and Corn­wall Coun­cil cut­ting it from 10% to 0%.

Ef­forts are now un­der way to close a loop­hole whereby some sec­ond home own­ers are avoid­ing pay­ing coun­cil tax or busi­ness rates on their prop­er­ties by reg­is­ter­ing them as busi­nesses, but be­low the thresh­old for busi­ness rates to ap­ply.

Labour Corn­wall coun­cil­lor Cor­nelius Olivier has pre­vi­ously claimed that more than 6,000 prop­er­ties were us­ing this loop­hole, which, if closed, could be worth an ad­di­tional £10mil­lion of in­come a year for Corn­wall Coun­cil.

Con­ser­va­tive MPs Derek Thomas, Steve Dou­ble and Scott Mann have all raised the is­sue in Par­lia­ment and have called on the Gov­ern­ment to al­low coun­cils to charge dou­ble coun­cil tax on sec­ond homes.

Gov­ern­ment min­is­ters have in­di­cated that they are look­ing at the is­sue, leader of the Labour party Jeremy Cor­byn an­nounced at the Labour Party Con­fer­ence that he would sup­port charg­ing dou­ble coun­cil tax on sec­ond homes.

Sec­ond-home own­ers are avoid­ing coun­cil tax by reg­is­ter­ing them as busi­nesses

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