North West Wales

Law change call to stop second home owners avoiding tax

Aberdaron Image copyright Google
Image caption Aberdaron, The Llyn peninsula

Calls have been made for a law change to stop second home owners avoiding additional council tax by turning their properties into self-catering lets.

Gwynedd council is a considering charging a premium on holiday homes.

Councillor Jason Humphreys, however, fears the authority will lose out as people sidestep the charge by classing their second homes as self-catering businesses.

Gwynedd said it was powerless to stop owners making the change.

Some Welsh councils have voted through hikes in council tax charges for second homes, including Anglesey and Pembrokeshire, with other councils still consulting on a change.

Since 2006, the number of self-catering units in Gwynedd has risen from 78 to 968.

Changes to the Housing (Wales) Act 2014 mean councils have the ability to charge a premium on top of the existing council tax payments for second homes from the 2017-18 financial year.

Image caption Second-home council tax premiums across Wales

But self-catering units are classed as businesses and so their owners pay business tax to the Treasury rather than council tax.

According to the law, self-catering units have to be made available for letting for 140 days a year, and owners have to prove they have been let for at least 70 days.

Mr Humphreys, chairman of the council's corporate scrutiny committee, told the Post Cyntaf programme there was no mechanism for monitoring the situation.

He called for AMs and MPs to demand a law change to make it compulsory for anyone seeking to reclassify their holiday home as a self-catering unit to apply for planning permission.

'Spiteful'

But Peredur Jenkins, cabinet member responsible for resources, said the council had no power to stop owners from designating their properties as self-catering units.

The council previously warned the potential "loophole" could leave authorities worse off.

Mr Jenkins said Gwynedd was pressing the Welsh Government to consider changing the planning regulations to give local authorities the power to determine whether owners could re-classify their properties.

The Welsh Conservatives have criticised the second home tax as an unfair "money-spinner", with shadow local government minister Janet Finch-Saunders calling it a "spiteful wealth tax".

She said it was a "a direct tax on people with second homes, many of whom already pay twice for services they rarely use".

An estimated 23,000 homes in Wales are empty or used as second homes.

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