'Every little helps' as we plan for a post-pandemic world
- Credit: Getty Images
There has in recent years been a significant problem in high tourism areas where second homeowners escape paying council tax by registering for business rates.
Many have, understandably, registered their second homes under business rates because they are run as legitimate holiday rentals and rightly so.
But some have taken this approach to avoid paying the higher level of council tax and therefore also escape having to pay business rates as they often qualify for business rates relief.
In other words, there has been a significant oversight in the taxation programme whereby a second homeowner can escape having to pay council tax and business rates altogether.
This has long been an issue that has concerned a great many people.
It is estimated that South Hams loses an estimated £1.2m in council tax receipts because of this oversight. Money that could well be spent on local services and supporting residents recover from the last 12 months.
During the 2019 General Election campaign, I recognised the need to address this issue.
- 1 Torbay Ironman completes first race of the season
- 2 Torquay United 3 Truro City 0
- 3 Gulls ready for Truro friendly
- 4 Spacious, family home in ideal location close to schools, shops and beaches
- 5 Vehicle life expectancy - who's the clever one?
- 6 Your Bay Needs You - and here are some of the jobs available
- 7 School is first in Bay to reach career guidance benchmarks
- 8 Family home in popular residential area
- 9 £15,000 'compensation' as Nemane leaves Torquay United
- 10 World's biggest sailing ship graces Bay's horizon
Residents from across South Devon raised their concerns that second homeowners were getting all the benefits of living in the area without having to contribute to its upkeep.
When elected, I wrote a policy paper for Chancellor Rishi Sunak calling for it to be harder for second homes to be eligible for business rates.
Now, 12 months on, it is hugely gratifying to see that the law is now set to be changed.
Last week, the Chancellor announced a series of tax measures. One of which will bring forward legislation that will change the ‘criteria determining whether a holiday let is valued for business rates to account for actual days the property was rented’.
The legislation will be brought to Parliament within the next few months.
This change is a significant step in bringing into line a tax oversight that has benefited a few and cost a great deal to our local councils.
But what will the change in law look like? Likely, the threshold - the number of days available plus the number of days actual let - will be dramatically increased.
Should a property fail to meet the required threshold, it will then be required to pay council tax.
Of course, if it meets the new level then business rates and business rates relief, where applicable, will come into force.
The reason for tackling this issue is that we are all aware how precarious our local services can be, from our brilliant refuse collectors to the maintenance of our roads.
Quite simply, to borrow a phrase, ‘every little helps’.
The millions of uncollected revenues will now reach South Hams District Council, Torbay authority and Devon County Council and can be put forward to help bolster local services.
There can be little doubt that the last year has put a terrific strain on the relationship between those who live all year round in Devon and those who live part-time. My inbox can testify to this point. The ‘them’ and ‘us’ attitude will not benefit either side.
Instead, we must look ahead and see how we can ensure that the tourism and hospitality sector contributes in a meaningful manner to our local economy, that those who can and should pay their fair share and that we do not demonise one side or the other.
As we plan for a post-pandemic world, we will need to close those tax gaps, tighten the oversights and bolster local and national coffers to ensure that we can build back better and deliver a levelling up agenda that delivers jobs and opportunities across the whole of the United Kingdom.