Welsh Government must address second home tax loophole, says Ynys Môn AM.

A loophole that enables people to register second homes as business premises, escaping council tax and costing Local Authorities greatly in business rate relief is costing councils dearly and needs to be addressed, says Plaid Cymru Assembly Member for Ynys Môn Rhun ap Iorwerth.

At an event in Rhosneigr recently, the Plaid AM said constituents raised the issue of ‘red bins’ with him, explaining that ‘When people register their holiday homes as businesses, they have their domestic bins changed for business ones—red ones. There are more and more of them in the village. It’s wrong—they’re not paying their taxes’.

Raising this matter once again with Welsh Government, having regularly raised concerns in the Assembly previously, Mr ap Iorwerth said:

“In November 2018, the former First Minister told me that he didn’t believe there was a loophole here. The finance Minister, Rebecca Evans, also said, ‘I’m not sure that I would agree that there’s a loophole in the law’.

“Certainly, it should be illegal to buy a second home and then be able to avoid paying the taxes that other full-time citizens of that same community do have to pay and still expect to receive the same services. What the red bins story tells us is that this is becoming more and more visible and people are getting angrier and angrier about it.

“Now, this Government won’t agree that there is a loophole here. Will you agree that there is a small mistake in legislation currently that has consequences that may well be unintended, but that has to be addressed in the name of fairness and in the name of providing local authorities much-needed revenue that is otherwise lost?”

After explaining the process regarding registering second homes as businesses or dwellings, Welsh Government Minister Julie James added:

“If it’s not being let out and it is classed as a small business, and what you’re saying is ‘It’s not being let out, it’s being used as a second home’, and the person has done that—that’s a fraud. So, that’s a criminal offence and would be prosecuted.

“We have asked all authorities in Wales for any evidence of that, and we have not been provided with any. We’ve asked the valuation office to conduct an audit of the ones that they’re aware of, and they have not come up with a single one that hasn’t legitimately changed across and hasn’t been able to provide the evidence necessary to sustain that.

“Now, I’ll say it again: if you’ve got evidence that that’s happening, let’s have it, and I’ll do something about it, but so far, at this point in time, we have anecdotes of all sorts, including in my own authority and everywhere else, but we have no actual evidence at all that that’s actually happening.”