The Welsh Government has changed the criteria for a holiday let property to qualify for business rates. Through the new rules the Welsh Government is trying to control the number of second homes in the country over concerns that some communities are being overwhelmed by holiday homes.
However some in the tourism industry fear that genuine holiday lets could end up paying thousands of pounds in council tax and therefore put some out of business. Some have described the new rules as "draconian," NorthWalesLive reports.
From April 1 the criteria for holiday lets to qualify as a business is changing. Holiday lets used as businesses can currently pay business rates instead of council tax. This often means that no tax is paid instead of higher rate bills for second homes in some counties.
READ MORE: You can buy a section of Wales' most iconic wooden rollercoaster
Under the new criteria the current 'availability threshold' for properties to qualify as holiday lets will rise from 140 to 252 and the current occupancy threshold will go from 70 to 182 days. Local authorities will also have the power to increase council tax premium to 300% but none have done this as of yet. The Valuation Office Agency (VOA) assesses properties in Wales for council tax or business rates based on whether their primary use is considered domestic or non-domestic.
How will the VOA assess properties?
The VOA issues forms called ‘Requests for Information’ with the VO6048 form designed specifically for self-catering units and holiday cottages. The information provided on this form is used to check whether the eligibility rules for holiday lets are met.
Owners of holiday properties might be asked to provide supplementary evidence to support the information included on the form which could be the financial accounts for their business, marketing of the property, or evidence of lettings. The change will take effect as part of the Valuation Office Agency’s property assessments from April 1 relating to the previous 12 months as well as the coming year.
How is the information checked?
Holiday let owners have been informed of the changes to eligibility rules by the VOA through letters, social media, and on GOV.UK. The information provided on the form is checked against information that is available to the public about the holiday let. The VOA then seeks out additional information and clarification where needed. Should the additional information suggest that the property does not meet the criteria for remaining in the non-domestic rating list it will be moved to the council tax list.
Are there any penalties for incorrect information?
The VOA said: "We want to support our customers to provide the right information. The form requesting information on holiday lets sets out the importance of providing accurate information within the specified timescales.
"As the new eligibility rules are introduced we will be focusing on supporting customers to provide the right information rather than enforcing penalties for non-compliance. But there is a range of compliance options available to the VOA if information isn’t provided within these timescales including issuing reminders and penalty notices. There is also provision in legislation for criminal proceedings for inaccurate information but these would be used very rarely and as a matter of last resort."
When do the new rules apply?
A rolling programme to check properties that properties listed as self-catering properties in the non-domestic rating list meet the eligibility criteria is carried out by valuation officers. Other circumstances may also lead to properties being reassessed such as when there has been a change of use.
The VOA said: "The rolling programme means we will write to customers asking for this information at different times during the 2023-24 operating year. We will be using a universal date, from which we will assess whether the new eligibility rules have been met, of April 1, 2023."
READ NEXT:
