Action taken to target second home owners exploiting tax loophole

David Beavan on Southwold seafront. Picture: SARAH LUCY BROWN

Southwold councillor David Beavan has been campaigning for action to close the second homes tax loophole - Credit: Archant

Free council services such as waste collections and parking spaces may be removed from second home owners taking advantage of a loophole to escape council tax and business rates.

The warning has come from East Suffolk Council as it gets tough on fraud.

A legislation loophole currently exists where second home owners register as a holiday let business to avoid paying council tax, but then make no efforts to let the home.

As businesses with a rateable value of less than £12,000 get a business rates relief of 100%, it means the homeowner effectively gets away with paying neither council tax or business rates.

It has been problem in coastal hotspots such as Southwold and Aldeburgh, exacerbated by people travelling from London to their second homes during the Covid-19 pandemic.

While Government is aware of the loophole and is working to close it, East Suffolk Council on Wednesday night unanimously agreed to take immediate measures.

It will mean any home registered as a business will be required to pay commercial waste collection and not be allowed free household bin collections, as well as barred from using resident parking spaces and household waste recycling centres.

Councillor Steve Gallant shares how East Suffolk Council is helping businesses and individuals

East Suffolk Council leader Steve Gallant - Credit: East Suffolk Council

Most Read

Conservative council leader Steve Gallant said: “I am aware of the behaviour of some individuals who seek to use a loophole in the current legislation to line their own pockets with scant regard for the effect this has on both our council and our residents.

“Those that choose to opt out of council tax should not avail themselves of the services that we as a council provide to our council taxpayers.

“If an individual home is registered as a business then it should be treated as a business, for instance if they want waste collection then they should be paying a commercial rate – they are a business.”

Other areas which could be used to clampdown on those seeking to subvert the system could be food standards visits or fire inspections.

Southwold Liberal Democrat councillor David Beavan, who has long campaigned for progress, highlighted one example where a London resident regularly travelled to Southwold during Covid, where he has a home registered as a holiday let that had no customers last summer.

Mr Beavan said: “If he wants to escape rates, he should register with HMRC as a furnished holiday let and show evidence of actually letting.

“This is not a party political matter, it is about decency and fairness. The loophole reflects badly on all second homers and divides our communities.

“This is going to be hard enough winter for local people, many of whom can’t afford one home, without having to subsidise these fraudsters with two homes.”

A neighbourhood plan being drawn up in Southwold and Reydon includes provision to ensure that all new homes are for principal residents only, meaning new homes will not be allowed to be used as second homes.