Laura Sharman 14 January 2022

Gove closes tax loophole on second homes

Gove closes tax loophole on second homes image
Image: ian woolcock/Shutterstock.com

A loophole that allows second home owners to avoid paying council tax by falsely claiming their properties are holidays lets will be closed under new measures.

The Government has announced changes to the tax system to ensure people are paying their fair share towards local services.

At the moment, home owners in England can avoid paying council tax and access small business rates relief by declaring an intention to let the property out to holidaymakers.

Under the new measures, second homeowners will have to prove holiday lets are being rented out for a minimum of 70 days a year and provide evidence such as the website or brochure used to advertise the property, letting details and receipts.

Secretary of state for levelling up, 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.'

The move has been welcomed by the Local Government Association (LGA) who have previously warned the current criteria is open to abuse.

Cllr Shaun Davies, chair of the LGA’s Resources Board, said: 'We are pleased government has listened to councils and is taking action to prevent owners of properties which are not genuine businesses exploiting the rules.'

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