WQ86125 (e) Tabled on 27/09/2022

Has the Welsh Government issued updated guidance to local authorities over exemptions to the 18-day threshold for business rate relief on second homes?

Answered by Minister for Finance and Local Government | Answered on 03/10/2022

The letting criteria determine whether self-catering property is classed as domestic or non-domestic for local taxation purposes. The Welsh Government is of the view that, for a self-catering property to be treated as non-domestic for local taxation purposes, it should operate as a business for the majority of the year.

Where a property does not meet all criteria, including the threshold of 182 days actually let, it will be classified as domestic for local taxation purposes and will be liable for council tax. It may also be liable for a council tax premium on second homes in areas where premiums apply. There are no exemptions from the letting criteria used to classify property as domestic or non-domestic.

The Council Tax (Exceptions to Higher Amounts) (Wales) Regulations 2015 provide for an exception from a council tax premium for properties restricted by a planning condition preventing occupation for a continuous period of at least 28 days in any one‑year period. The Welsh Government is exploring whether amendments to these regulations are necessary, to account for other planning conditions which prevent a property being used as a permanent dwelling.

If we determine that an amendment is necessary to except properties subject to other planning conditions from council tax premiums, our intention is that this would be brought into effect from 1 April 2023. We have also committed to issuing revised guidance to local authorities on additional options that are available to them in the event that self-catering properties restricted by planning conditions do not meet the letting criteria and are liable for council tax. We will consult on any proposals to amend the regulations and the revised guidance in due course.

This work is being carried out in collaboration with Siân Gwenllian MS, the Plaid Cymru designated lead member, as part of the Co-operation Agreement between the Welsh Government and Plaid Cymru.