More tax benefits for second home owners with fake vacation rentals

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Second home owners who claim to let their properties to holidaymakers to save on taxes will be forced to pay more under tougher government measures

The Department of Leveling, Housing and Communities (DLUHC) is set to close a loophole in the system that allows people to access tax relief if they dishonestly claim their properties are being used as vacation rentals.

As things stand, people who own second homes in England can avoid council tax and get relief from small business rates by simply declaring their intention to let the property to holidaymakers, a declared the DLUHC.

They don’t need to prove that their homes are actually being used for this purpose, which leaves the door open for people to abuse the system.

We will not sit idly by and allow people in privileged positions to abuse the system by unfairly claiming tax breaks and leaving local people to count the cost

That will change under plans announced on Friday – with second owners being forced to pay council tax if they can’t prove they are genuinely letting their properties on a commercial basis.

From April 2023, to access the cheapest tax rates, they will have to prove that their accommodation was rented for at least 70 days the previous year.

People will also have to show that their properties were available to rent for 140 days that year, and will be again in the coming year.

Vacation rental owners will need to provide evidence such as the website or brochure used to advertise the property, rental details and receipts.

The new measures are designed to crack down on those who “take advantage of the system to avoid paying their fair share”, the DLUHC said.

Michael Gove, Secretary of State for Leveling Up, said: “The Government is supporting small businesses, including responsible short-term rentals, which attract tourists and bring significant investment to local communities.

“However, we will not sit idly by and allow people in privileged positions to abuse the system by unfairly claiming tax breaks and leaving local people to count the cost.

“The action we are taking will create a fairer system, ensuring second home owners contribute their share to the local services they enjoy.”

Crispin Truman, chief executive of CPRE, the rural charity, said: ‘While we support plans to stop people abusing a tax loophole for holiday homes, these proposals do not go far enough. far.

“There is a rapidly growing housing crisis in rural England and the government must get to grips with it quickly. Ministers must do much more to meet the affordable housing needs of rural communities.

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