Second Homes and UK Council Tax

The rising popularity of serviced apartments attracts guests seeking hotel-like comforts while maintaining their privacy. To stand out among the competition and increase profitability, it’s crucial to enhance your marketing strategies for your multiple properties in town.

Curious about second home council tax in the UK? Look no further for a comprehensive guide. We’ll delve into various facets, including potential discounts and tax-saving strategies.

The amount you pay for second home council tax hinges on how you use the property and its location within the UK. Stay tuned for updates on upcoming changes to these tax charges.

Whether you’re in the process of acquiring a second home or already have one, this guide is your key to navigating the world of second home council tax.

What does a council tax mean?

Council Tax is a local council levy that finances essential services such as waste collection. Typically, it’s an annual cost spread across ten monthly payments. If you’re 18 or older and either own or rent a property, you’re usually responsible for paying council tax. However, if your household has two or more “liable adults,” the full amount is due. It’s important to note that university students and individuals with severe mental impairments are not considered liable adults. Single-adult households can benefit from a 25% discount, while those without any liable adults can enjoy a 50% reduction.

Moreover, there are numerous discounts and exemptions available. For a more in-depth understanding, be sure to explore our comprehensive guide on securing a council tax reduction.

How is a second home defined in terms of council tax eligibility?

In terms of council tax regulations for second homes, these are typically furnished properties that are either unoccupied or owned by someone whose primary residence is elsewhere.

Is it possible to obtain a council tax reduction for my second home?

In most instances, local councils typically do not grant council tax discounts for second homes, obliging you to pay the full council tax rate for your secondary property. Nevertheless, certain exceptions exist where you might be eligible for a council tax reduction on a second home. For example, certain councils may offer a 50% discount on council tax for a second home under the following circumstances:

The Council Tax payer must reside in job-related accommodation elsewhere due to their employment terms, such as a caretaker or minister of religion.
The second home is a pitch occupied by a caravan or a mooring occupied by a boat.

It is advisable to review the specific regulations and policies of your local council pertaining to second home discounts.

Second home council tax bill rises from 2023

The government’s Levelling Up and Regeneration Bill heralds a significant shift in England’s approach to council tax on second homes. This bill grants local councils the authority to impose double council tax on furnished homes that do not serve as the sole or primary residence. As a result, many second homeowners may face substantially higher annual payments. However, for this premium to take effect from April 2024, the Bill must have received Royal Assent by April 1, 2023.

While the proposed increase in council tax for second homes may not be well-received by the majority of second home owners, it has garnered substantial public support. In a YouGov poll conducted in February 2023, 59% of respondents expressed their backing for doubling the council tax rate on second homes.

Meanwhile, significant changes are also afoot in Wales. Starting in April 2023, Welsh local authorities will have the option to implement council tax premiums on second homes and long-term vacant properties at a maximum rate of 300%. This represents a significant escalation from the prior maximum of 100%. Consequently, this shift in second home council tax in Wales may translate to substantial annual expenditures for second homeowners.

Furthermore, Welsh councils will enjoy the flexibility to set the premium at any level up to the maximum and can apply varying premiums to second homes and long-term vacant properties. However, certain property categories, such as short-term holiday lets, may be exempt from these alterations.

How to skip council tax for a second home?

Can you escape second home council tax? Some second home owners in England have tried to avoid paying council tax by classifying their property as a business and renting it through platforms like Airbnb, which allowed them to benefit from small business rates relief.

However, recent changes have made the rules stricter. In the past, simply declaring your property as a holiday let was enough to skip council tax. But now, the criteria for qualifying for small business rates relief have become more demanding:

Council tax on holiday lets in England: Until March 31, 2023, if your property is available for short-term rentals for at least 140 days per year, it’s considered a self-catering property and assessed for business rates. From April 1, 2023, it must not only be available for short-term lets for at least 140 days in total over the current and previous tax years but must also have been actually let for at least 70 days in the last 12 months.

Council tax on holiday lets in Wales: Until March 31, 2023, your property is rated as a self-catering property and assessed for business rates if it’s available for short-term rentals for at least 140 days per year and has actually been let for at least 70 days per year. However, from April 1, 2023, it must be available for short-term rentals for at least 252 days in total over the current and previous tax years and must also have been actually let for at least 182 days in the last 12 months.

Council tax on holiday lets in Scotland: In Scotland, if your property is available for rental for 140 days or more per year and has been let for 70 days in a financial year, you should contact your local assessor to determine if your property, or a part of it, might be subject to business rates.

When you do not pay Council Tax

If you’re handling the sale of a property on behalf of a deceased owner, you won’t be required to pay Council Tax while the property remains vacant until probate is obtained. Once probate is granted, you might qualify for a Council Tax exemption for an additional 6 months if the property fulfills the following conditions:

It’s unoccupied.
It’s still owned and registered in the name of the deceased person.

Certain homes remain exempt from Council Tax as long as they remain empty. These include properties:

Owned by someone in prison (except for non-payment of a fine or Council Tax).
Occupied by someone who has moved into a care home or hospital.
Repossessed properties.
Properties that cannot be legally inhabited, such as derelict ones.
Properties left empty due to compulsory purchase for future demolition.

Who is responsible for paying council tax in a buy-to-let property?

If you own a property and rent it to a single household, the tenants typically handle the council tax payments. However, there are cases where the property owner is liable for council tax, especially if it’s let as a House in Multiple Occupation, with individual room rentals.

When contemplating buy-to-let property investments, it’s important to consider additional expenses, including potential higher stamp duty rates for existing property owners and the possibility of paying capital gains tax (CGT) upon selling the property.

What happens if I don’t pay council tax?

If you’ve failed to make a council tax payment, it indicates you’re in arrears. It’s recommended to contact the Council Tax office promptly and clarify your circumstances. Ignoring the arrears may lead to legal action by your council, resulting in court costs and potentially bailiff fees.