Following consultation on the business rate treatment of self-catering accommodation, the government have provided details of how the existing rules will be strengthened and of new regulations that will take effect from 1 April 2023.
At the moment, people who own second homes in England can avoid paying council tax and can access small business rates relief by declaring an intention to let the property out to holidaymakers. However, concerns have been raised that many people never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break.
The government are now planning to bring in 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
- receipts
Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.
The government’s consultation response announces that, from 1 April 2023, a property will only be assessed for business rates rather than council tax 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
- during the previous year, it was let commercially, as self-catering accommodation, for short periods totalling at least 70 days
The Valuation Office Agency will be responsible for determining whether a property should be assessed for council tax or business rates under this new system.
If you think that your property may fall into this category and you need any further guidance, please contact a member of the team.