Gove closes holiday let loophole for owners of second homes

Jessica Bird

January 14, 2022

Michael Gove

The Department for Levelling Up, Housing and Communities, led by Secretary of State for Levelling Up Michael Gove (pictured), has closed a tax loophole that allows owners to claim empty second homes as holiday lets.

Homeowners who leave properties empty while pretending to let them to holidaymakers will be targeted under the new rules, which state that from April 2023, holiday lets must be rented out for a minimum of 70 days a year to qualify for business rates.

Gove’s changes to the tax rules aim to protect ‘genuine’ holiday lets, while those who abuse the tax loophole are forced to pay.

Currently, owners of second homes in England can avoid paying council tax and access small business rates relief by simply declaring an intention to let the property out to holidaymakers.

However, concerns have been raised that many never actually let their homes and leave them empty and are therefore unfairly benefiting from the tax break.

Following consultation, the government will bring changes to the tax system, which will mean second homeowners must pay council tax if they are not genuine holiday lets.

Holiday let owners will have to provide evidence such as the website or brochure used to advertise the property, letting details and receipts.

Properties will also have to be available to be rented out for 140 days a year to qualify for this relief.

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.”

Kurt Jansen, director of the Tourism Alliance, added: “Establishing these new operational thresholds for self-catering businesses is welcomed by the tourism industry as it makes a very important distinction between commercial self-catering businesses that provide revenue and employment for local communities, and holiday homes which lie vacant for most of the year.

“It is recognition that tourism is the lifeblood of many small towns and villages, maintaining the viability of local shops, pubs and attractions.”

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