Holiday rental tax loophole must be closed following widespread tax avoidance allegations

Landlords and owners of second homes have been asked to pay council tax if they cannot prove their properties are genuine holiday rentals after the government announced it was closing a tax loophole.

Some landlords are currently claiming their often-empty properties are vacation rentals for avoid paying council tax and accessing small business rate relief by declaring its intention to rent the property to vacationers.

Following concerns that many never let their accommodation and unfairly benefit from the tax relief, from April 2023 second home owners will need to prove vacation rentals are rented for at least 70 days a year to access the property. small business rate relief, provide proof such as website or brochure, leave details and receipts.

Properties will also need to be available for rental 140 days per year to qualify for this relief.

Privileged positions

Secretary of State for Leveling Up Michael Gove (pictured) said: ‘We will not sit idly by and allow people in privileged positions to abuse the system by unfairly claiming tax breaks and letting local people count the cost.

The action we are taking will create a fairer system, ensuring that second home owners contribute their share to the local services they receive.

A government consultation revealed that the overwhelming majority of respondents agreed that the current criteria should be strengthened.

Some professional tourism organizations have argued that it conferred on secondary owners likely to rent their property from time to time an unfair commercial advantage over professional businesses.

Vacation rental owners who cannot meet the enhanced criteria have been warned to notify the Assessment Office Agency as soon as possible so that their property can be assessed as domestic and revert to a property tax assessment. habitation – or risk a large backdated habitation tax bill.

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