Do second homes pay council tax in UK?

Nikka Sulton

Do second homes pay council tax in UK?

Do second homes pay council tax in UK? Wondering about second home council tax in the UK? Our comprehensive guide has you covered. We’ll explore various aspects, including the potential for discounts and strategies to avoid this tax.

The amount you pay for second home council tax depends on how you use your property and where it’s located within the UK. Additionally, we’ll keep you updated on upcoming changes to second home council tax charges.

So, whether you’re purchasing a second home or already own one, this guide will provide valuable insights into navigating the world of second home council tax.

What is council tax?

Council Tax is a local council charge that supports essential services like waste collection. This annual fee is usually divided into ten monthly payments. If you’re over 18 and either own or rent a property, you’re typically liable for council tax. However, if your household has two or more “liable adults,” you must pay the full amount. Liable adults don’t include university students or individuals with severe mental impairments. Single-adult households enjoy a 25% discount, while those with no liable adults receive a 50% discount.

Furthermore, there are various discounts and exemptions available. To learn more, explore our comprehensive guide on obtaining a council tax reduction.

What is classified as a second home for council tax reasons?

Regarding the regulations for second home council tax, second homes are classified as furnished properties that are either unoccupied or owned by someone with their primary residence elsewhere.

Can I get a council tax discount on my second home?

In most cases, local councils do not offer a council tax discount for second homes, requiring you to pay the full council tax amount for your second property. However, there are exceptions where you might qualify for a discount on council tax for a second home. For instance, some councils provide a 50% discount on second home council tax if:

The Council Tax payer must reside elsewhere in job-related accommodation due to the terms of their employment, such as a caretaker or minister of religion.
The second home is a pitch occupied by a caravan or a mooring occupied by a boat.

It’s advisable to check the specific regulations and policies of your local council regarding second home discounts.

Second home council tax bill rises from 2023

The government’s Levelling Up and Regeneration Bill introduces a significant change regarding council tax on second homes in England. Under this bill, local councils will have the authority to levy double council tax on furnished homes that are not utilized as the sole or primary residence. This means that, in many cases, second homeowners may face paying substantially more each year. However, for this premium to be enforced starting in April 2024, the Bill must have received Royal Assent by 1 April 2023.

Although the proposed increase in council tax for second homes may not sit well with the majority of second home owners, it has garnered considerable support from the general public. According to a YouGov poll conducted in February 2023, 59% of respondents expressed support for doubling the council tax rate on second homes.

In Wales, a significant change is also on the horizon. Beginning in April 2023, local authorities in Wales will have the option to set council tax premiums on second homes and long-term empty properties at a maximum level of 300%. This marks a substantial increase from the previous maximum of 100%. Consequently, this alteration in second home council tax in Wales could result in significant annual expenses for second homeowners.

Furthermore, Welsh councils will have the flexibility to establish the premium at any level up to the maximum, and they can apply different premiums to second homes and long-term vacant properties. Nevertheless, certain property types, such as short-term holiday lets, may be exempt from these changes.

How to avoid second home council tax

Can you avoid second home council tax? Some second homeowners in England have attempted to circumvent council tax by registering their property as a business and leasing it through agents or platforms like Airbnb, which allowed them to access small business rates relief.

However, there have been recent changes in the rules. In the past, simply declaring an intention to rent out a property as a holiday let was sufficient to avoid council tax. But now, the criteria for qualifying for small business rates relief have become more stringent:

Council tax on holiday lets in England

Until 31 March 2023, if your property is available for short-term rentals for at least 140 days per year, it is classified as a self-catering property and assessed for business rates. Starting from 1 April 2023, it must not only be available for short-term lets for at least 140 days in total over the current and previous tax years but must also have been actually let for at least 70 days in the last 12 months.

Council tax on holiday lets in Wales

In Wales, until 31 March 2023, your property is rated as a self-catering property and assessed for business rates if it’s available for short-term rentals for at least 140 days per year and has actually been let for at least 70 days per year. However, from 1 April 2023, it must be available for short-term rentals for at least 252 days in total over the current and previous tax years and must also have been actually let for at least 182 days in the last 12 months.

Council tax on holiday lets in Scotland

In Scotland, if your property is available for rental for 140 days or more per year and has been let for 70 days in a financial year, you should contact your local assessor to determine if your property, or a part of it, might be subject to business rates.

When you do not pay Council Tax

If you’re handling the sale of a property on behalf of a deceased owner, you won’t be required to pay Council Tax while the property remains vacant until probate is obtained. Once probate is granted, you might qualify for a Council Tax exemption for an additional 6 months if the property fulfills the following conditions:

It’s unoccupied.
It’s still owned and registered in the name of the deceased person.

Certain homes remain exempt from Council Tax as long as they remain empty. These include properties:

Owned by someone in prison (except for non-payment of a fine or Council Tax).
Occupied by someone who has moved into a care home or hospital.
Repossessed properties.
Properties that cannot be legally inhabited, such as derelict ones.
Properties left empty due to compulsory purchase for future demolition.

Who is responsible for paying council tax in a buy-to-let property?

If you own a property and rent it to a single household, the tenants typically handle the council tax payments. However, there are cases where the property owner is liable for council tax, especially if it’s let as a House in Multiple Occupation, with individual room rentals.

When contemplating Buy to Let property investments, it’s important to consider additional expenses, including potential higher stamp duty rates for existing property owners and the possibility of paying capital gains tax (CGT) upon selling the property.

What happens if I don’t pay council tax?

If you’ve failed to make a council tax payment, it indicates you’re in arrears. It’s recommended to contact the Council Tax office promptly and clarify your circumstances. Ignoring the arrears may lead to legal action by your council, resulting in court costs and potentially bailiff fees.