Government announces closure of second homes loophole in places like Cornwall
It follows a campaign led by a Cornish MP
The government has announced the closure of the second homes loophole, following a campaign from a Cornish MP.
The loophole has been allowing some second home-owners to get away with not paying any tax for their properties.
To ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no realistic effort to actually do so, the government will legislate to change the criteria determining whether a holiday let is listed for business rates rather than council tax in England, and account for actual days the property was rented.
In England, a holiday let can currently qualify pay business rates rather than council tax when the owners declare they intend to make their property available to let 140 days in the coming year. There are no checks to verify that they are actually commercially rented out.
Of the over 60,000 holiday lets currently on the business rates list, approx. 96 % have a rateable value which would likely qualify them for Small Business Rates Relief and as a result pay no business rates at all and therefore make no contribution to local services.
The new criteria will ensure that owners of properties that are not genuine businesses are not able to avoid paying tax on their property.
“I am delighted to see the Government listen to my campaign to close the loophole which allowed some second home-owners to register their properties as businesses and qualify for business rates relief and avoid making any contribution to local services, without actually being legitimate businesses.
“This is something I have been calling for, for some time, asking questions in Parliament, and meeting with Ministerial colleagues to push for the change which is needed to close this loophole, and I am pleased to see the Government is now pressing ahead with this.
“I look forward to seeing the detail of the proposed legislation, and will continue to work to ensure this loophole is closed as soon as possible.”
Steve Double, MP for St Austell and Newquay
"Going back to my time as a Cornwall Councillor the loophole which has allowed some unscrupulous second home owners to claim business rates relief for their properties and therefore avoid paying any rates at all, despite not being legitimate businesses, has been one that I have asked to be closed.
"Since my election in 2019 I have worked with my Cornish MP colleagues to make the case to the Government for this closure, and was pleased to see them consulting on this, despite the delays that have occurred due to the COVID-19 pandemic.
"I am pleased to see the Government has listened and will be responding positively to the consultation. I look forward to seeing the detail and that this loophole will be closed as soon as possible to urgently address this unfair situation."
Cherilyn Mackrory, MP for Truro and Falmouth