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HMRC and Valuation Office working on new tax regime for holiday lets

A government housing minister has confirmed to the House of Lords that a new tax regime for Airbnb hosts and holiday let landlords is being prepared.

Earlier this year there was criticism of some holiday home landlords who registered their additional properties as businesses, thus making them entitled to rate relief for small businesses.

Now Lord Greenhalgh, speaking at the latest House of Lords debate on second homes, has said: “The government have confirmed that we will legislate to require that holiday rentals meet an actual letting threshold before being assessed for business rates. This will ensure that only genuine holiday businesses can access the rate relief for small businesses. We will set out further details shortly in the government’s consultation response.”


Later in the debate he said: “I point out that 96 per cent of second homes pay council tax in full, even though they may use local services only on an occasional basis. We believe that, in the sharing economy, where people run businesses and meet the threshold, it is reasonable for them not to pay council tax and to be subject to the business rates regime. No local authority has lost out, because they are covered by various grants in the business rates retention scheme.”

Various Labour peers spoke of what they claimed to be the need for tougher restrictions on second homes in general, and the tax that applied to them.

Lord Kennedy of Southwark, for example, said: “Holiday lets, as we know, can be much more lucrative than tenancies, with landlords frequently able to bring in the income they would get over the course of a whole year from tenants in just the summer months. Small business rate relief also means that they can pay very little tax. Should the Government not do more in this area, perhaps with a larger levy, to encourage landlords to rent to tenants instead?”

And Lord Campbell-Savours, another Labour peer, contributed: “The proliferation of holiday lets in lakeland towns such as Ambleside, Windermere and Keswick is decimating the residential market for locals, particularly the young. The switch from council tax to a reduced business rate system will only aggravate the problem by further incentivising holiday letting. Is not the answer to this wider problem of drift to holiday letting to cap the number of holiday lets through the use of a combination of licensing and planning rules?”

Lord Greenhalgh told the House that HM Treasury was working the Valuation Office Agency to finalise the details of how and when the new tax regime would be implemented. 

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    Here we go! Another business about to be wrecked under this lot. Can’t wait to help smash your majority come the next election.


    They used to be the party for business now they are just another left wing party, something has to change.



    A reduced Tory majority means an emboldened left wing influence in Parliament which will only help the benefit claimers.

    I have both holiday let and long term rental properties. I really don't understand why a long term rental is not counted as a business, as the rental stream is its only benefit to me, ignoring capital appreciation which applies to all properties.

    On the other hand, I can claim full tax relief on all costs associated with a holiday let property including interest costs, avoid Council Tax, use it myself when it's not let and only pay 10% CGT on selling it.

    I think holiday lets should be taxed on the same basis as long term rentals but any difference should be to the benefit of long-term rental businesses providing long term homes and not to the benefit of furnished holiday lets as at present.

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    They are still not recognising that a large no of the properties currently being used as holiday lets is due to their constant attacks on the long term rental market in the form of taxation, anti landlord legislation and the constant chipping away of landlords rights over their own property.
    I too have holiday lets, family lets and a student HMO, and I have to admit that the holiday lets are the least stressful and currently the most profitable, although as usual they are talking about controlling and penalising landlords for doing holiday lets despite the fact that in my area the tourist industry represents the greater part of the local economy.
    No thought about how to level up the playing field for landlords doing long term lets to encourage them back, just more penalties!
    I have to agree with Robert that although I am disgusted with the way the Tory party has deserted it's previously basic policy of promoting business to create employment and wealth it is still the lesser of all the evils, when you listen to some of the loony proposals coming from most of the other parties!


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