Second home owners are enjoying tax reliefs worth millions of pounds by renting out their properties as holiday homes

Shruti Tripathi Chopra
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Colliers estimates holiday homes in Cornwall are being subsidised by millions (Source: Getty)

Holiday home owners are cashing in on millions of pounds by taking advantage of the government's small business rates relief system, according to Colliers International.

Second home owners, who rent out their properties as holiday homes for 140 days in a year, qualify as small businesses and are entitled to relief on 100 per cent of the business rates payable if their properties have a rateable value of less than £12,000.

Colliers, which analysed the potential rate bill of 7,300 holiday homes in Cornwall, claims that more than 7,100 of second home owners had properties with a rateable value of less than £12,000 and so are paying nothing in business rates.

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The real estate consultancy estimates that these holiday homes are being subsidised by £13.2m, compared to if they were paying their business rates.

"Over the five-year rating list, this equates to £66m," Colliers said.

John Webber, head of rating at Colliers International said: "The government’s business rate system is totally unjust and needs serious reform. It’s a scandal that those who have holiday homes and rent them out are able to take advantage of the small business rates relief and so pay less tax, putting the burden of the rates bill onto other businesses who are struggling to pay their bills.

"The 2017 business rate revaluation resulted in many businesses being hammered when revalued, particularly the smaller specialist high street retailers in the major cities, but also other businesses that provide jobs and make major contributions to the economy. I doubt many second home owners would begrudge paying these charges but if the government is foolish enough to allow this to happen then it is the government’s running of the system that should be seriously questioned."

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