Refinements to the classification of self-catering properties for local tax purposes from Welsh Government
The Welsh Government has published its summary of responses to the consultation that Proposed refinements to the treatments of self-catering properties.
On 21 January, the Welsh Government published its summary of responses to the consultation that Proposed refinements to the treatments of self-catering properties for local tax purposes.
The Finance Minister, Mark Drakeford, has confirmed that Welsh Government has made the Order required to implement the two specific proposals.
The first proposal was to enable an average of days let over multiple years, being two or three years, to be taken as evidence of compliance, where 182 days letting has not been achieved in the previous years. In the CLA Cymru’s response to the consultation, we did not agree with this proposal as it does not address the issue that 182 days is an unrealistic target for true businesses to reach. The threshold of 182 days is simply too high for many true holiday let businesses, especially those that are located in rural areas. We have heard from many of our members who has never reached 182 days, even prior to the policy change, despite being open 365 days of the year.
Due to the influx of properties that are not reaching the impracticable threshold of 182 days, the Valuation Office Agency (VOA) is already strained attempting to meet the increased demand. We have heard of wait times of at least nine months to receive an answer. The averaging of days across multiple years will only place more strain on an agency that is grappling to sustain the work load they already have.
Secondly, Welsh Government proposed to enable an allowance of up to 14 days per year for donations to charity to count towards the letting criteria. CLA welcomes the opportunity for business owners to include charitable donations towards the threshold of 182 days, however we felt that other exemptions should be prioritised along with this allowance.
These two initial proposal refinements to the application of the letting criteria to take effect from April 1 2026.
The consultation also sought views on the Welsh Governments intention to encourage local authorities to support self-catering operators who do not meet the non-domestic rates letting criteria with a stepped transition to council tax, charged at the standard rate of council tax for the first year before any premium is applied.
CLA Cymru welcomed this intention, however under section 13a 1c of the Local Government Finance Act 1992, local authorities already have the power to apply discretion. To be effective, this ‘encouragement’ should be mandated and apply to Wales as a whole. The necessary regulations to deliver this proposal will be developed and brought forward as soon as possible, to apply from April 1 2027.
If you have any queries about your holiday let liability for council tax, the policy team in the CLA Cymru team would like to hear from you. Contact details are here.
