Spotted by TBH in This Is Money:
Second home owners who have registered their properties as businesses are set to land an £85million windfall from the Government's small business grant scheme.
Experts said the loophole allows the owners of second homes – many of which are registered in Devon, Cornwall, the Lake District and in seaside towns such as Scarborough – to register them as businesses as long as they 'make them available' to let for 140 days of the year* and take bookings for at least half of those days.
The practice, known as 'flipping', allows the property owners to pay business rates instead of council tax. It also means they are eligible for the Government's small business rates relief scheme, which means all but the largest properties pay little or no tax.
Owners are now also poised to collect a share – around £1,300 each – of £2.2billion support for small businesses closed due to coronavirus restrictions. According to commercial property adviser Altus Group, there are more than 62,000 properties in England which are classified as holiday homes and have been flipped** to become 'commercial' premises for tax purposes.
It is not the first time that the owners of second homes have benefited from Government handouts during the coronavirus crisis...
* The official name for this is "Furnished Holiday Lets" and is a set of insane (and fiddly) tax reliefs for second home owners.
** No doubt many of them will be flipped back from Business Rates to Council Tax when the Business Rates exemption ends - Council Tax is usually much lower. I wonder if they will ever publish that statistic.
It Should Have Been A Cull, Not A Ban...
1 hour ago
6 comments:
Oh no... What are the costs of administering this scheme?
Interesting - this is the guidance for Wales
In relation to self-catering accommodation, properties will not be eligible for the grant unless the following criteria are met:
The self-catering accommodation can produce two years of trading accounts directly preceding the current financial year of the business
The self-catering accommodation must actually have been let for a period of 140 days or more in the financial year 2019-20
The self-catering accommodation business must be the primary source of income for the owner (minimum threshold is 50%).
Anyone who's just decided to become a home flipper isn't going to meet the criteria. Alas, I'm not familiar with the English guidance. Seems rather easy to be gamed if what you and Altus say is true.
This looks like hype to me. Letting a second home for 70 days a year is not easy if you live hundreds of miles away, organising changeovers, cleaning, rubbish disposal etc. Yes, I'm sure some people do it, but I doubt it's many.
"* The official name for this is "Furnished Holiday Lets" and is a set of insane (and fiddly) tax reliefs for second home owners"
I would have thought that "Furnished Holiday Lets" applied primarily to properties only used as holiday lets, i.e. genuine businesses. Again, I would also think that most FHLs are owned by people who live locally so that they can manage the changeover, maintenance etc.
AC, there was no requirement in England to show two years accounts.
Mark, Altus are out of date. To qualify as an FHL, properties have now to be available for 210 days a year and let for 105 of those.
G, AC and B, there are so many different inter-linked rules that nobody understands them. Least of all me, I just know enough to know that they are stupid.
Why do you think this is a problem?
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