Government to close business rates loophole
Many second home owners use a loophole to avoid council tax on the property. However, the government has announced that new rules will apply to prevent abuse from April next year. What’s going on?
Under the current system, owners of second properties in England can avoid a council tax bill if there is an intention to let the property to holiday makers. This brings the property into the business rates regime and, as a result, small businesses rates relief can be claimed. The problem is that many second home owners are declaring an intention to let their property, when in reality they just remain empty for most of the time.
From April 2023, the rules will change so that only genuine holiday lettings will qualify for the relief, bringing non-qualifying properties back into the charge to council tax. A property will only be assessed under the business rates regime if the owner can provide evidence that:
- it will be available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days in the coming year;
- during the previous year, it was available for letting commercially, as self-catering accommodation, for short periods totalling at least 140 days; and
- during the previous year, it was actually let commercially, as self-catering accommodation, for short periods totalling at least 70 days.
Related Topics
-
Getting out of the child benefit tax trap
You expect to earn over £60,000 for this tax year which means you may have to pay back some or all of your family’s child benefit due to the high income child benefit charge (HICBC). Is it possible to reduce the charge?
-
HMRC targets “dodgy shops” in new compliance crackdown
The government has announced a new crackdown on businesses suspected of facilitating tax evasion, with HMRC increasing its focus on so-called "dodgy shops" used to enable tax fraud. What is HMRC targeting?
-
Mandatory payrolling of benefits in kind delayed
The government has revised plans to introduce the mandatory payrolling of benefits in kind from 6 April 2027, which will now be limited to company cars, vans, fuel and medical benefits. What's the full story?