Following a consultation that ran from 25 August 2021 to 17 November 2021, the Welsh Government have announced new tax rules. These new rules impact those buying what amounts to a second home in Wales and those who run self-catering accommodation.
The Welsh Government have previously expressed concerns about the number of second homes. They believe it is creating a lack of affordable housing for some of the communities in Wales.
What do the new rules mean?
Rather than seeking the outright outlawing of second homes in Wales, the aim is to try and address the problem through amending the planning, property and taxation systems available to them.
From April 2023, Local Authorities in Wales have the option (at this time we would like to stress just the option) to increase Council Tax on second homes and those that remain empty on a long-term basis by 300% on top of the original Council Tax.
The current level that an increase can be made is 100% on top of Council Tax. This will apply to properties that have been empty for 2 years of more (long-term empty) and second homes, which is usually a property that is owned but where the owner is not using it as their main residence (often evidence by not being registered to vote at that property).
For those who are seeking to open a business in Wales, specifically the provision of self-catering accommodation (“SCA”), will also find changes coming in. Currently if a property can be let as SCA for at least 140 days, and is actually let for at least 70 days, the owner pays business rates instead of Council Tax.
The new proposal is to lift the threshold from 140 days of available lets to 252 days of available lets and actually being let for at least 182 days in any 12-month period. This means those running SCA are more likely to fall under Council Tax instead of business rates; a move to encourage more tourism by allowing owners to rent their properties more and have more visitors to a local area and hopefully spend more money.
If you are considering buying a property in Wales as a second home, we advise you to check with the Local Authority about what your likely Council Tax bill is going to be so as to avoid any nasty surprises.
Would you like our help?
The team at Burtons can keep you in the know with tax rules in Wales. You can fill out an online contact form here and one of our staff will be in touch shortly.