Many second home and holiday let owners are avoiding draconian council tax charges by ‘flipping’ their properties onto the business rates list, Colliers claims.

By limiting the time a property is rented out, an owner can pay business rates instead of council tax and claim relief.

And the incentive to ‘dodge’ tax this way is greater now many local councils are charging double council tax on second properties.

Most acute

Under current regulations, property owners who make their properties available to rent as holiday lets for 140 days of the year and let them commercially as self-catering accommodation for short periods of 70 nights, can claim they are a small business.

And as small businesses they can then claim relief on 100% of the business rates if their properties have a rateable value of less than £12,000.

Colliers analysed the rating list for the southwest of England (Cornwall, Devon, Dorset and Somerset), and found there were 21,678 properties on the list claiming 100% business rate relief.

The issue is most acute in Cornwall where 10,731 holiday let properties do not pay either business rates or council tax.

Cloud cuckoo land

John Webber, Head of Business Rates at Colliers, says: “Although current measures in place are tighter than they have been in the past, they are just not strong enough to deter second property owners ‘flipping’ onto the business rates list.

“Local authorities seem to have managed to return some properties to the council tax lists, but this is still not enough.”

And he adds: “If Cornwall Council believes doubling council tax on second homes is the answer to deterring second homeowners and solving the local housing crisis, they are living in “cloud cuckoo land”.

“Meanwhile agents selling properties in popular domestic holiday areas positively advertise the business rates savings advantages of gaming the system.”

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