A tourism chief has stood up in favour of closing what the government calls a tax loophole for landlords letting out holiday properties.
Kurt Jansen, director of the Tourism Alliance, says the clampdown - announced at the end of last week - makes a very important distinction between commercial self-catering businesses that provide revenue and employment for local communities, and holiday homes which lie vacant for most of the year.
Currently, owners of second homes in England can avoid paying council tax and access small business rates relief by declaring an intention to let the property out to holidaymakers.
However, concerns have been raised that many never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break.
Following a consultation, the government says it will now bring changes to the tax system, which will mean second homeowners must pay council tax if they are not genuine holiday lets.
From April 2023, second homeowners will have to prove holiday lets are being rented out for a minimum of 70 days a year to access small business rates relief, where they meet the criteria.
Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.
Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.
Jansen says this is “recognition that tourism is the lifeblood of many small towns and villages, maintaining the viability of local shops, pubs and attractions.”
He continues: “The move will protect genuine small holiday letting businesses across the country and will support local economies by encouraging tourism and by ensuring second homeowners pay a fair contribution towards public services.”
Around 65,000 holiday lets in England are liable for business rates of which around 97 per cent have rateable values of up to £12,000.
Currently there is no requirement for evidence to be produced that a property has actually been commercially let out.
When he announced the clampdown, Housing Secretary Michael Gove said: “The government backs small businesses, including responsible short-term letting, which attracts tourists and brings significant investment to local communities.
“However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost.
“The action we are taking will create a fairer system, ensuring that second homeowners are contributing their share to the local services they benefit from.”
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