It looks as if landlords with holiday lets will have to pay more in rates/council tax.

This has emerged from the Governments Tax policies and consultations paper, just published. 

‘The paper also includes a range of policy announcements and updates which will support wider improvements in the tax system, including on business rates and environmental taxes, as well as measures to drive down non-compliance and enhance simplification’, said Financial Secretary to the Treasury Jesse Norman, when laying the paper before Parliament.

A change in capital gains tax rules, bringing them more into line with income tax, and making CGT more expensive for private landlords when selling properties, had been widely tipped. However, no such change was included.

But the paper did promise to strengthen the self-catering accommodation criteria for business rates.

‘The government will legislate to change the criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented, following a previous consultation. This will ensure that owners of properties cannot reduce their tax liability by declaring that a property is available for let while making little or no actual effort to do so’.

Further details of the change will be included in the Government’s response to the current consultation on the issue which will be published ‘shortly’.

Because there are business rate exemptions and allowances for smaller businesses, property run as holiday lets usually pay less in business rates than they would otherwise pay as domestic council tax. It has been claimed some owners have said their properties are holiday or short term lets when in practice they are not available to rent for at least part of the year. The Inland Revenue wants to put a stop to this.