English local authorities have gained increased authority to impose significant council tax surcharges on specific categories of second homes. The regulations, effective from April, introduce the possibility of substantial council tax premiums being added to bills for second home owners, regardless of whether the property is used as a vacation home, a holiday rental, or is awaiting a decision on its use.
Previously, English councils were empowered to levy a 100% council tax surcharge on certain unoccupied second homes, resulting in some owners facing bills reaching £10,000. As the impending tax implications loom, second home owners are diligently exploring strategies to minimize this upcoming financial burden.
Understanding the current regulations for council tax on second homes is crucial. A property is classified as a second home for council tax purposes if it is not your primary residence. Generally, council tax is payable on properties owned that are not the primary residence, whether they are utilized as vacation properties, rented out, or left unoccupied.
Different local authorities may impose varying council tax rates, and owners of holiday homes or vacant second homes can request council tax discounts from their council. However, the possibility of facing council tax surcharges on properties left empty for over a year, coupled with the impending rule changes in 2025, signals a potential increase in tax responsibilities for second home owners.
From April 2025, councils will have the discretion to apply a "second homes premium," allowing for an additional 100% council tax on furnished homes not serving as the primary residence. The revised rules will redefine an "empty home" and reduce the duration a property can remain unoccupied before incurring a council tax premium of up to 100%. Previously, councils imposed a premium on substantially unfurnished properties left vacant for two years, but under the Levelling-Up and Regeneration Act 2023, this duration will decrease to one year, encompassing substantially furnished homes as well. Consequently, second home owners may face significantly higher charges as properties previously classified as "empty homes" may now incur substantial new costs.