Holiday home tax rules could be eased after backlash

Tax rules on holiday homes could be relaxed after a backlash from owners.

The Welsh government will look at the impact of a "modest" reduction to the 182-day business rate threshold for self-catering accommodation.

Property owners pay higher council tax if properties are not let for at least 182 days a year.

Finance Minister Elin Jones said she also wanted more "clear and reasonable exemptions" to the rule.

The Professional Association of Self Caterers (PASC) welcomed the review, calling it a chance to "reconsider one of the most damaging policies to affect Welsh tourism businesses in recent times".

Reform UK said it was unclear whether a "modest reduction" in the threshold would provide meaningful support for the tourism sector.

Plaid Cymru said in its election manifesto it would review the 182-day rule, which has been in place since April 2023.

It was one of the policies introduced to tackle second homes under the Labour-Plaid co-operation agreement in the last Senedd.

Previously properties had to be available for 140 days of the year and actually let for 70 to qualify for business rates – a system that still exists in England.

Under the Welsh system, properties now need to be available for at least 252 days and actually let for an average of 182 days over a two or three-year period.

If not, they can be classed as second homes and liable for council tax, which in some counties includes an additional premium.

In Gwynedd, for example, second-home owners pay the standard council tax rate, plus an extra 150%.

A government consultation will look at "whether the 182-day threshold is set at the right level and what impact a modest reduction might have".

It also proposes five new possible exemptions for accommodation that cannot be used as permanent homes, including properties on owners' farms.

Jones said: "I have heard representations from a number of businesses that are making meaningful contributions to their local economies but are unable to meet the current threshold.

"This consultation will help us find a solution that works better for everyone, including businesses, local authorities and local areas.

"I am committed to getting the balance right - keeping homes in our communities while giving tourism the support it needs to thrive."

PASC welcomed the review, but said the occupancy levels being considered by ministers could still be too high.

Nicky Williamson, the association's Welsh policy adviser, urged "every operator to explain how the current rules affect their business and why a realistic threshold is essential if Welsh tourism is to remain competitive".

"Our objective has never been to remove the distinction between genuine holiday businesses and second homes," she said.

"It is to ensure that viable tourism businesses are not penalised by an occupancy requirement that many simply cannot achieve."

Reform UK Wales said the tourism industry needed more detail on what a proposed "modest reduction" in the threshold would mean in practice and whether it would provide meaningful support for the sector.

Shadow minister Louise Emery said: "Plaid Cymru's proposals of more exemptions could mean more bureaucracy.

"Rather than just tinkering around the edges, a more ambitious plan to reduce the threshold needs implementing."