Councils across England and Wales claim property owners are soaking up millions of pounds in cash designed to prop up small businesses by exploiting a ‘tax avoidance loophole’.
The rules they are quoting allow self-catering holiday lets to pay business rates instead of council tax.
Under guidance from the government, local councils should automatically offer holiday let owners paying business rates a payment holiday for the 2020-21 tax year.
To qualify as a holiday let, the property has to pass strict occupation tests to prove the home is run as a commercial enterprise, although the rules vary slightly between each country
Councils have the power to penalise owners they believe are trying to avoid paying council tax on a property they set aside for their own use.
The guidance is not a tax avoidance loophole but a legitimate tax break offered to holiday let owners.
Politicians in Wales are loathe to pay the grant because they consider the cash is for businesses in Wales but going to property owners outside their borders – and councils in popular English holiday regions take the same view.
English holiday let owners can also claim a £10,000 grant from the Retail, Hospitality and Leisure Grant Fund (RHLG). Similar funding is available in Wales and Scotland.
Cornwall councillor Cornelius Olivier has branded holiday homeowners ‘greedy’ for picking up the loan.
The county has 8,000 eligible holiday lets and 5,000 have each received £10,000.
“This means 27% of the grants money for Cornwall has gone to the owners of these properties,” he said.
“Why are we giving this money to people who don’t need it? We should be making a stand.
“It is quite clear that the business grants are for – to keep people afloat that wouldn’t otherwise survive.
“For these holiday lets to get this money – you know I think they are taking the p*** by applying.”
In Yorkshire, B&B owners who cannot qualify for the grant are complaining about the grants because they pay council tax and do not qualify under the RHLG scheme.
In England, 55,000 holiday lets are estimated as eligible for rates relief and the RHLG grant.