Rules to curb tax loophole for second homes welcomed by Suffolk coastal community figures
New Government rules to curb a tax loophole for second homes have been welcomed by community figures in coastal Suffolk communities where it has been a problem.
The Department for Levelling Up, Housing and Communities on Friday announced it was changing the rules around holiday lets to prevent people exploiting a loophole that meant they did not have to pay council tax or business rates.
From April 2023, people claiming their home is a holiday let must demonstrate their property is rented out at least 70 days per year to qualify for small business rates relief and available to let for at least 140 days per year.
Currently, owners have claimed they are a holiday let business to avoid paying council tax. However, they then make no attempt to let their property and as businesses with a rateable value of less than £12,000 get a 100 per cent discount on business rates, results in them not having to pay.
The issue has been highlighted as a problem in key Suffolk coastal towns like Southwold and Aldeburgh.
David Beavan, Southwold Liberal Democrat councillor at East Suffolk Council who has campaigned on the issue, said: “I am really pleased that they have closed this iniquitous loophole at last, but what took them so long? Would they have taken three years to shut down benefit fraud?
“And this does not mean that our communities will stop their inexorable drive to be hollowed out as holiday parks.
“Renting out a house as a holiday let should require change of use planning permission from a residential home so that we can control the number.
“I also want to know which ‘businesses’ claimed £10,000 Covid grants from the taxpayer.”
Cllr Beavan also questioned why the rules were not coming into force until April 2023.
Data for East Suffolk indicates there are more 4,000 houses across the district considered second homes, although it is not clear if that data considers those claiming to be holiday lets or not.
Exact numbers exploiting the practise and how many are legitimate are not known.
In November, the council agreed it would crackdown on those found to be utilising the loophole by refusing to empty their bins.
Steve Gallant, Conservative council leader and Eastern Felixstowe elected member, said: “We welcome this announcement from the Government, which will tackle those individuals who abuse the current situation for their own financial gain – an issue which we recently resolved to address ourselves.
“Whilst we are yet to scrutinise the finer details of the announcement, we are pleased that action is being taken which will ensure those with a second home in East Suffolk will contribute towards the council services they receive.”