Government to consult over ending council tax loophole

The government has announced a consultation on ending a business rates loophole that is costing councils in England millions of pounds in lost revenue. The current system allows second homes to be valued for business rates instead of council tax if they are deemed to be 'available to rent' for at least 140 days a year. This means such properties are eligible for business rate relief.

As a consequence, such homes usually qualify for small business rate relief of 100%, meaning any property with a rateable value of £12,000 or less pays no tax. There are around 47,000 holiday homes falling into this category, of which 96% have rateable values of £12,000 or lower. At present, there is no requirement to prove the property is actually being let.

Local Government Minister Rishi Sunak MP said the government is responding to concerns that the system is being abused. He added, "We are seeking views on whether we should strengthen the checks already in place to ensure second-home owners have to pay council tax, while ensuring genuine holiday let businesses are able to demonstrate they are eligible for business rates relief.