A Cotswolds based firm of chartered surveyors is warning second homeowners that their days of paying neither council tax nor business rates are numbered.

Bankier Sloan, who deal exclusively in retail, office and industrial premises across much of the North Cotswolds, specialise in Business Rates Reliefs.

Many local councils in Gloucestershire stand to gain financially as a result of the change in government legislation, as owners will simply decide to pay the council tax on their second home.

With thousands of second homes in the Cotswolds and the surrounding countryside some local councils, and even the Treasury are expecting a windfall starting in April 2023.

April 2022 is however the key date for many. Homeowners may currently pay Council tax on their second homes but the majority claim their property is available to rent for more than 140 days per year and therefore it is given a Rateable Value.

This allows the owners to claim Small Business Rates Relief and in the vast majority of such cases the premises are given a rateable value below £12,000 and the owners receive 100% relief. This relief is paid for by central government who reimburse local councils the lost income based on the rateable value.

By this means owners pay neither council tax nor business rates. This is currently a perfectly legal arrangement and works to the benefit of almost all second-home owners as they do not need to prove that they actually rent the property for even one day per year.

From April 2023 owners can decide to pay Council Tax or if the property is available to rent for more than 140 days per year, they can still claim Small Business Rates Relief, but they will need to prove that the property was actually rented out for more than 70 days in the previous financial year (starting April 2022).

They will need to show invoices, and receipts and expenses, and as a result will pay Income tax on the declared income, thus benefitting the Treasury. 'Renting' to family and friends for 70 days per year is not going to be accepted.

Whilst operating the second home as a business will remain very acceptable to the Treasury, it is expected that many local councils will gain financially as most homeowners will simply accept they must pay the local tax, and will not attempt to prove that they are renting out their second-homes. Councils in many poplar holiday areas are expecting to see an increase in income of hundreds of thousands of pounds.

Letting out their private homes to visitors is going to be a 'no-go' for most such house owners.

For many local authorities and even parish councils there will finally be a financial gain, although for most a local family occupying a home throughout the year may well remain the preferred option.