Councils lumped with staggering £334m invoice from double tax loophole | UK | News | EUROtoday

Second owners skirting the double council tax invoice may value native authorities a staggering £334million. Since 1 April, underneath the brand new powers granted by the 2023 Levelling Up and Regeneration Act, native councils have been capable of impose a 100% premium on second houses. In Wales, this premium could be as excessive as 300%.

However, savvy property moguls have found a loophole that permits them to keep away from these taxes by itemizing their second houses as vacation lets and renting them out for no less than 70 nights per yr. This crafty transfer qualifies the properties for enterprise charges aid and utterly exempts the house owners from paying any council tax. According to analysis by property agency Colliers, the whole quantity of misplaced council tax income has doubled previously yr, rising from £170m.

Politicians and consultants now argue that these skyrocketing figures exhibit that the 100% remium tax is inflicting extra hurt than good.

Shadow housing minister Kevin Hollinrake criticised the Government for his or her counterproductive tax raid.

He stated: “Labour couldn’t even be bothered to carry out any impact assessment, nor have they asked councils to restrict the policy to where there are localised problems in the housing market.”

John Webber, from Colliers, acknowledged that it is “making the situation even worse” and highlighted that “less money will be collected locally”, leading to decreased spending on important native wants comparable to public providers or reasonably priced housing.

He added: “The problem is not second home owners; it is politicians failing to understand the issues and having the courage to do something about it.”

Politicians are failing to understand the problems and lack the braveness to take mandatory motion. A staggering 230 out of 296 councils in England, and 20 out of twenty-two in Wales, have accepted the Government’s provide and imposed the inflated levy.

For a property to be labeled as a vacation let, house owners should make it obtainable for no less than 140 nights and really lease it out to guests for 70 nights inside a yr.

The council calculates the enterprise charges invoice an proprietor pays primarily based on the property’s rateable worth, which is decided by its kind, dimension, location and potential rental revenue from holidaymakers.

Owners who solely let one property could also be eligible for small enterprise charges aid, probably receiving as much as 100% lief. Properties with a rateable worth between £12,001 and £15,000 will see the speed of aid steadily lower from 100% to 0%

For occasion, if the rateable worth is £13,500, the proprietor will obtain a 50% low cost on their invoice. There are roughly 73,838 vacation let properties that qualify for enterprise charges aid in England and Wales.

This determine has decreased from 80,000 final yr attributable to stricter rules, however Colliers anticipates numbers to surge once more because of the double tax raid.

Prior to 2023, property house owners merely needed to specific an intention to make use of their dwelling as a vacation let to fulfill the enterprise charges aid {qualifications}.