Property tax: Second home loophole to end in April 2023

Property tax: Second home loophole to end in April 2023

Starting in April 2023 many second homeowners will not qualify to pay business rates rather than council tax. However, the good news is that if they can demonstrate that their properties are rented out as a self-catering holiday let for at least 70 days a year then they can still qualify to pay business rates.

Presently, second homeowners can advertise their properties for rental to holidaymakers for 140 days per year to avoid paying council tax even if it is never let out. This is because you do not need to provide evidence that the property has been commercially let out. Although they are subject to business rates, then under the small business rate relief as long as the property has a rateable value of less than £12,000 then the property’s business rates liability is zero.

 

This ‘loophole’ has been criticised for a number of years, particularly in regions such as the Lake District, the West Country, and rural Suffolk. Government data shows that there are 65,000-holiday lets in the UK. Around 97% of these have rateable values of up to £12,000. Subsequently, it is highly likely that many second homeowners are taking advantage of this ‘loophole’.

It was announced in 2018 that the Department for Levelling Up, Housing & Communities had launched a consultation into limiting the opportunities for second homeowners to declare their property as holiday accommodation and subsequently qualify for small business rate relief. However, due to the global pandemic and change in government administration, it was not announced until 23rd March 2021 (Tax Day) that a tightening of the holiday let rules would be implemented in England (subject to consultation).

The new rules were published this month which will take effect from April 2023. The new rules state that a property will be assessed for business rates only, and not council tax, if the owner of the second home can provide the Valuation Office Agency with evidence that:

  • The property will be available for commercial letting as self-catering accommodation, for short periods amounting to at least 140 days in the coming year.
  • In the previous year, it was available for commercial letting as self-catering accommodation, for short periods totalling at least 140 days. Plus, it was let commercially, as self-catering accommodation, for short periods amounting to at least 70 days.

 

So this change could have a significant impact on individuals who own second properties which are not commercially let out.

 

How can we help?

At Hawsons we have a dedicated team of property and construction accountants at our offices in Sheffield, Doncaster, and Northampton.

Hawsons has a dedicated team of specialist property and construction accountants in Sheffield, Doncaster and Northampton.

We act for a large number of property and construction firms across all three of our offices, including:

  • Investors
  • Developers
  • Construction firms
  • Estate agents
  • Surveyors
  • Architects

Having an accountant who understands the challenges of this dynamic sector and is able to help you plan for the future is an advantage in a competitive environment. At Hawsons we have a great deal of experience in advising and helping businesses in property and construction and we can assist you as your business grows.

Our in-house tax team have advised in many aspects of taxation specific to the property investor including in the areas of VAT, Capital Allowances, Income, and Corporation Tax and Capital Taxes.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Stephen Charles

Tax Partner, Sheffield

0114 266 7141

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The Marriage Allowance – Time is running out to claim

The Marriage Allowance – Time is running out to claim

The Marriage Allowance can enable eligible married couples and civil partners to save up to £252 of tax a year. Despite being introduced almost seven years ago, many eligible couples are still missing out on this tax break. As payments can only be backdated up to four tax years, after 5 April 2022 it will not be possible to claim the Marriage Allowance for 2017/18.

The relief is designed to benefit couples where one spouse has insufficient income to make full use of their tax-free personal allowance (£12,570 for 2021/22). Where the couple meet the qualifying conditions, the spouse with the unused personal allowance can elect to transfer £1,260 of the allowance to their partner, offering a tax saving of up to £252 for 2021/22.

It is also currently possible to backdate the claim to 5 April 2017, to obtain an additional tax saving of up to £968. Please note that the deadline for claiming the Marriage Allowance for 2017/18 is 6 April 2022 so time is running out to claim it.

The transfer can only be made if the spouse who receives the transferred allowance is a basic rate taxpayer, meaning that for 2021/22 they would normally need to have an income of no more than £50,270 (or £43,662 if you are in Scotland).

For more information on how to apply for the Marriage Allowance go to www.gov.uk/apply-marriage-allowance or get in touch with us.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Craig Walker

Tax Director, Sheffield

0114 266 7141
England Woodland Creation Offer – grants available for farmers

England Woodland Creation Offer – grants available for farmers

England Woodland Creation Offer

With a shift in regime from the Basic Payment Scheme to one targeting agri-environmental objectives, more farmers are looking to forestry as a way to generate income.

The England Woodland Creation Offer (EWCO) is a scheme available across England. This scheme is available to owner-occupiers, tenants, landlords, and licensors that have full management control of the land in the application. Furthermore, joint applications, multiple land managers, and applications on common land and areas of shared grazing are eligible. If you do not have full management control of the land then you will need consent from those that do. The aim of this scheme is to encourage landowners such as farmers, land managers, etc to plant trees and develop woodlands. The scheme supports areas as small as one hectare and applicants could receive over £10,000 per hectare to support the woodland creation.

The land is eligible for the scheme if it is:

  • in England
  • within the full management control of the applicant (or, where applicable, any counter-signatories)
  • not already classified as woodland
  • not subject to any existing legal requirement or obligation to create woodland
  • not subject to a dispute between landlords and tenants
  • not currently within an existing grant agreement that has more than five months left to run at the time the EWCO application is submitted (if the land or part of it is in an Environmental Stewardship agreement it may be possible to transfer the land into EWCO as long as certain conditions are met)

EWCO is a criteria-based competitive scheme. Offers of Agreements will be made to applicants with woodland creation proposals whose scores meet or exceed the threshold score. The threshold score is currently ten points. We recommend reading the criteria to make sure that you can maximise the number of points you could receive. The more points you have the more lucrative your offer of Agreement will be.

Each area has a woodland creation officer, their details can be found here: https://www.gov.uk/government/organisations/forestry-commission/about/access-and-opening#Woodland-Creation-Officer

 

Dan Wood Partner at Hawsons commented:

We are seeing an increase in farms looking to agroforestry. One of the key benefits of the EWCO is that DEFRA have indicated that farmers and landowners will be able to transfer into future environmental land management schemes at agreed points without having to repay their current funding. The potential to sell carbon credits generated by woodland creation may be a further source of income, made even more attractive by the fact that it is currently tax-free.

That said, this scheme may not be for everyone, it does require long-term planning and a commitment to take a significant area of land out of production. There does remain uncertainty about the longer-term future of the subsidy regime and we expect that many will wait until the extent of the schemes becomes clearer before making a significant investment.

If you would like to read through the application process, please visit the government website here: https://www.gov.uk/guidance/england-woodland-creation-offer

 

How can we help?

Hawsons has a dedicated team of specialist agriculture accountants in Sheffield, Doncaster, and Northampton. We know that farming isn’t just a business; it’s a way of life.

The rural and agriculture sector is a specialist sector, with unique practices and conventions, and we act for a significant number of arable farms and assist farming families in many matters specific to the sector including tax and will planning and succession planning.

We have been able to assist our farming clients in adding value to their businesses including advising on the financial and taxation consequences of property development, green technologies and capital allowance planning. In particular, we can assist in the area of capital taxes planning which is a significant issue for most farmers following the increase in land values and the availability of development opportunities.

Free initial meeting

Dan Wood

Partner, Doncaster

01302 262 367

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HMRC crypto-asset letters | are you being nudged?

HMRC crypto-asset letters | are you being nudged?

Are you being nudged?

In November 2021 HMRC began sending letters out encouraging UK domiciled individuals to pay income tax and capital gains tax (CGT) on income and gains arising from crypto-asset holdings.

If you have received one of these ‘nudge’ letters you must act upon this. Letters are usually sent to individuals they deem a cause for concern, i.e. when your tax affairs don’t appear to be in order. HMRC may take further action if you don’t respond in receipt of the letter, it is important to be totally co-operative to protect yourself from failure to notify penalties.

Nudge letters could be used as a push in the right direction, giving you a chance to seek expert advice on the effects of investing in crypto-asset holdings. There are a number of complexities to crypto-asset holdings which you could unknowingly fall into the trap of, effectively initiating unintentional tax liabilities.

 

How can we help?

At Hawsons we have a dedicated team of tax experts at our Sheffield, Doncaster and Northampton offices. Our understanding of the complex issues with crypto asset holdings allow us to provide you with informed tax advice.

More from our tax experts

You can find all of our latest tax articles and tax resources here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

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Aaron Hemmington

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HGV driver shortage is easing, but will it be short-lived?

HGV driver shortage is easing, but will it be short-lived?

Pallet-Track chief executive Caroline Green has reported there are promising signs that we could be through the worst of the HGV driver shortage crisis.

 

Wage increases and more tests easing HGV driver shortage

Since the height of the HGV driver shortage in September 2021, which was largely caused by the ‘pingdemic’ and Brexit-related issues, we have seen the noise around the HGV driver subside for a number of reasons.

Firstly, there have been significant pay rises across the sector. This has persuaded many drivers to return to the sector to take advantage of these increased rates of pay. Furthermore, bonuses and flexible shift patterns, as well as the implementation of government schemes, such as Skills Bootcamps, and fast-tracking HGV driver tests have helped ease the shortage.

However, top haulage and logistics firms have warned that wage increases will need to be maintained, else the easing of the HGV driver shortage may be short-lived.

Secondly, we are now seeing more HGV tests being conducted. Caroline Green believes that more trainee HGV drivers are coming through the testing system, but says that more needs to be done to make the sector a more attractive job prospect for new recruits.

 

Underlying causes of HGV driver shortage still unresolved

Despite this Caroline Green has warned that issues such as Driver CPC becoming unpopular among older HGV drivers and low-quality facilities are still yet to be resolved.

With the Omicron variant of COVID-19 still being a concern, another ‘pingdemic’ could create another severe HGV driver shortage.

Although the HGV driver shortage is easing and we are not in a state of crisis, many haulage and logistics firms are reporting that they are still short of drivers and that the driver situation is not ideal.

The underlying issues currently facing the sector mean that we are only another ‘pingdemic’ away from a potential HGV driver crisis.

Paul Wormald, Transport partner for Hawsons commented:

We commented last year how the Nation’s lorry drivers are an often neglected element of the UK’s workforce, often having to work long, unsociable hours in less than ideal working conditions, and how they are indispensable to the UK economy.

From a macro economic viewpoint, it is good to hear that this acute pressure on the sector may be beginning to ease as pure economics dictate that if there is a scarcity of properly trained drivers, then hauliers are likely face increasing wage costs to attract the drivers they need. This in turn will filter its way to end-users in increased prices.

The early signs of stabilisation in the market for drivers may bring some marginally increased certainty for haulage firms anxious about spiralling wage bills, however, it would seem that there is still some way to go to bring longer-term certainty to the HGV driver market.

 

How can we help?

At Hawsons we have a dedicated team of transport and logistics accountants at our offices in Sheffield, Doncaster, and Northampton.

We act for a large number of clients in this sector across our three offices, ranging from hauliers to international couriers, and understand the challenges this dynamic sector faces.

Nearly every other commercial sector is reliant on the services transport and logistic businesses provide and, in many ways, this specialist sector is the linchpin for our country’s economy.

With our experience in the transport and logistics sector we are able to develop a close understanding of your business and, through active year round involvement, we can help you anticipate and deal with challenges quickly and effectively.

More from our transport and logistics experts

You can find all of our latest transport and logistics sector news and newsletters here.

If you are looking for advice in a particular area, please get in touch with your usual Hawsons contact.

Alternatively, we offer all new clients a free initial meeting to have a discussion about their own personal circumstances – find out more or book your free initial meeting here. We have offices in Sheffield, Doncaster and Northampton.

Free initial meeting

Paul Wormald, Partner

Paul Wormald

Partner, Doncaster

01302 367 262

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