Social Justice and Local Government Minister Carl Sargeant, this week made new legislation to ensure that owners of properties that are predominately unoccupied or used as a second home will no longer benefit from a tax loophole whereby they can pay less tax on their property by paying business rates instead of council tax.
The new legislation requires that in order for a building to be liable to pay business rates instead of council tax, properties must be let for at least 70 days during the previous 12 month period.
Business rates for this type of property are often significantly lower than council tax, and so this new legislation prevents owners of properties that are predominately unoccupied or used as second homes from reducing the amount of tax they pay by declaring that the property is available for let but making very little effort to do so.
Properties that are unoccupied for much of the year can have a negative impact on the local community as they do not have occupants who would use local goods and services and contribute to the community. This legislation goes some way to deterring this, whilst not affecting the eligibility of properties that are used for commercial letting for at least 70 days of the year.
Carl Sargeant said: “This legislation is crucial as it closes a potential tax avoidance loophole, while not adversely affecting the taxation liability of genuine businesses.
“The Assembly Government recognises the importance of a thriving tourism sector to the Welsh economy. Over 95% of the self catering properties that are liable to pay business rates benefit from Assembly Government funded rates relief, with most paying rates of under £10 per week.”
