Second homeowners can continue to rent out properties as holiday lets to cut their tax bill after Labour declined to crack down on the “loophole” at the Budget.
Self-catering accommodation groups were delighted that Chancellor John Healey opted to continue the tax relief enjoyed by property owners set up as small businesses.
Almost 80,000 owners in England and Wales have registered to pay business rates, which helps them avoid the hefty council tax bills imposed on second homes.
Second homeowners in England can register it as a business – so long as they make it available to holidaymakers for 140 days a year on platforms like Airbnb, and actually let it for at least 70 days a year.
In Wales, second homeowners must take bookings for 182 days a year to avoid council tax premiums and qualify for less costly business rates instead.
Many local authorities in England have begun imposing a 100 per cent council tax premium on second homes, doubling owners’ bills. The Welsh Government allows councils to impose 300 per cent premiums.
But by registering as holiday let businesses, property owners can avoid council tax and claim small business rates relief (SBBR) and pay zero or only minimal tax.
‘Shocking Labour has failed to close loophole’
There had been speculation that Labour might close the “loophole” at the Budget. The Treasury launched a consultation last year under Healey’s predecessor Rachel Reeves.
The department said “concerns have been raised about SBRR being used by second-home owners whose main aim is not to operate a local business but to manage tax liabilities”.
However, the Treasury has decided against any changes. A Budget document said it did “not see evidence that the current occupancy rules are insufficient in ensuring that business rates reliefs support genuine businesses”.
St Ives, Cornwall, has seen a rise in second homes bought by investors (Photo: Peter Titmuss/UCG/Getty)Andrew George, the Liberal Democrat MP for St Ives in Cornwall, said in a post on Facebook that it was “shocking” that Labour had failed to close the “tax loophole”.
The doubling of council tax on second homes in Cornwall had “encouraged even more to flip their property from council tax to business rates, apply for small business rate relief and then pay nothing”, said the MP.
Cornelius Olivier, housing campaigner and Labour activist in Cornwall, said he was “disappointed but not surprised” at the tax relief being allowed to continue.
“I don’t think Cornwall’s political representatives have been asking hard enough,” he said. “We need planning controls to stop holiday lets and second homes further eroding Cornish communities.”
Increase in holiday homes getting tax relief
Until now, the owners of properties let as holiday homes making £12,000 or less have qualified for 100 per cent small business rate relief.
At the Budget, Healey expanded the small business rate relief threshold from £12,000 to £18,000 for qualifying retail, hospitality and leisure properties.
The Chancellor declined to make changes for holiday lets at the Budget (Photo: Dylan Martinez/Getty)The new, more generous threshold will apply to short-term lets, The i Paper understands. But it will make little difference to the sector because, in practice, the vast majority of the holiday lets set up as businesses already pay zero.
There was an increase in holiday home owners registered for business rates relief in the past year, according to figures shared with The i Paper.
There are 79,550 short-term let properties registered for business rates in England and Wales, according to Connells analysis of Valuation Office Agency (VOA) figures.
It marks a small increase from the 75,860 properties registered in 2025. The vast majority of these holiday let owners pay no business tax, with only 1.5 per cent of them paying some portion of it, say Connells.
‘Vast majority want as many bookings as possible’
Self-catering accommodation and landlord groups have argued that the majority of owners registering for the tax relief were serious about running their property a self-catering business.
They reject the idea of a “loophole”, saying holiday lets remain a vital part of the tourism sector.
The Professional Association of Self-Caterers (PASC UK) welcomed the “good news” that the SBBR would still be available to holiday let owners.
“We welcome the published response, and the increase to threshold to £18,000 in England for small business rates relief is very welcome,” said Alistair Handyside, PASC UK’s executive chair.
“You have a lot of rules to follow and there is substantial investment that goes into setting up a holiday let business,” he added. “The vast majority want to get as many bookings as possible.”
Scott Woodman-Evans, chairman of the Landlord Association, said: “Genuine holiday accommodation businesses should have access to appropriate small business relief.
“They support cleaners, tradespeople, cafes and shops, often in places where tourism keeps the local economy going,” he added.
Some “desperate” holiday let owners have had to cut prices to as little as £20 a night to meet the rules around the number of booking days and avoid hefty council tax charges, The i Paper reported earlier this year.
The current rules requiring a minimum number of nights being booked was imposed in 2022, in a previous crackdown by the Conservatives.
It followed reports that some owners were keeping properties empty nearly all year round but still managing to avoid extra council tax bills.
Paula Higgins, chief executive of the HomeOwners Alliance, previously told The i Paper that the most obvious loophole had already been closed in 2022.
She said switching your property to a holiday let was a legitimate way of avoiding council tax premiums – but warned that operating as a business could be challenging for some second-home owners.
When approached by The i Paper, a Treasury spokesperson didn’t respond to questions about the holiday let “loophole”, but said raising the SBRR threshold was aimed at “giving high streets more breathing space”.
They added 70,000 more retail, hospitality and leisure businesses would be taken out of business rates altogether.
Hence then, the article about loophole means second homeowners can still avoid double council tax was published today ( ) and is available on inews ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
Read More Details
Finally We wish PressBee provided you with enough information of ( Loophole means second homeowners can still avoid double council tax )
Also on site :
- AI’s real bottleneck is electricity. Who will pay for it?
- Noah Wyle Says Eddie Murphy Told Him to ‘F— Off’ When He Was 9 Years Old, So ‘The Pitt’ Star Always Signs Autographs for Kids Now
- Stora Enso's Board of Directors approves demerger plan to separate Bergslagets Skogar into a new listed company, announcing strategic targets and dividend policy