The Taxman is now tightening up on holiday lets

30/03/2021

In 2020 some 56,300 properties in England are registered as holiday lets and this has been increasing each year.

A second home can be changed to holiday let status if the owner intends to advertise the property for holiday rent for at least 140 days a year. However, HMRC do not believe that the intention is always there.

So second home owners have been befitting from changes such as moving to business rates, instead of paying council tax. With the tax breaks on business rates applying to all rateable values under £12,000 this means they pay no rates. Add to this during the pandemic there has been a large number of claims for the £10k emergency income support cash grants from second home owners, even though there was little evidence of income generated by these properties. [Could be as much as £600m in grants were available to owners of holiday lets under the scheme].

HMRC is now taking steps to make owners prove that they are making a "realistic effort" to find holiday lets. If they can't their homes will be put back on council tax lists and they will have to pay local authorities any money owed. They will also have to pay any additional tax that becomes due when other tax relief they have benefitted from is not longer valid.

The full details of the clampdown will be revealed by the Treasury next month.