Government review into second homes tax loophole
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 business 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 hol- iday 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.”
The announcement comes after new figures showed that 3,510 properties were sold as second homes in Cornwall in 2017/18.
Local Democracy Reporter ‘Everyone should pay their fair share of rates.’
Steve Double