Shock council tax bills hit small holiday let owners under 182-day rule

CLA Cymru has been inundated in recent weeks with calls from members facing sudden and unexpectedly large council tax bills. Several of these include second home premiums, despite owners believing they had met the 182-day occupancy requirement set by Welsh Government legislation from April 2023.

A little-known change in the law has resulted in many holiday let owners receiving large bills due to a legal technicality over the number of nights a property has been let. Although many owners believed they had satisfied the new letting thresholds, they have been caught out by a legislative pitfall.

CLA Cymru is reviewing the legislation, seeking clarity from policymakers, and engaging with stakeholders such as the Professional Association of Self Caterers (PASC).

According to the PASC 2025 survey, 47% of holiday let businesses now believe they are unviable, with occupancy levels back to 2019 rates. Politically, the Conservative Party has proposed reducing the threshold back to 105 days, while Plaid Cymru has suggested 145 days. CLA Cymru continues to advocate across party lines.

When the change was made in April 2023, the requirement was for owners to let their properties for at least 182 nights. Many increased their marketing efforts and reduced prices to achieve the target. Meeting the threshold is critical, as it qualifies businesses for business rates instead of the significantly higher council tax, which may also include a local authority second home premium. Local Authorities are allowed to charge up to 300% increases for this, although the current highest rate in Wales stands at 200%, the potential is there to triple tax bills, rendering some businesses financially unviable. In some cases, planning restrictions should have exempted owners from these charges. However, inconsistencies in how local authorities have interpreted the legislation are causing confusion, concern and large bills. The written guidance from May 2022 stated: "The Order will come into force on 14 June 2022 and have practical effect from 1 April 2023... but compliance with the criteria will not be assessed until after 1 April 2023." Yet, recent tax demands suggest retrospective assessments prior to this are being made.

Some members have been shocked to discover that the Valuation Office Agency (VOA) has assessed them to have fallen short of the letting requirements. With many believing they only needed to comply from April 2023 onwards. Unfortunately, once the VOA determines a property should revert to council tax, subsequent occupancy data is disregarded unless owners actively apply to revert to business rates.The backdating of council tax bills arises due to the VOA’s infrequent reporting cycle, typically every two to three years. If, during any part of the reporting period, a property fails to meet the threshold, it will be moved to council tax from the April following the reported shortfall. Furthermore, VOA processing delays (reportedly up to nine months) are compounding the issue.

This is clearly another ill thought through practical application of policy. With members taking the brunt of the lack of on the ground planning. As the 182-day rule is being applied retrospectively, many owners unwittingly missed the threshold in their first year, making them liable for council tax for the past three years. This harsh administrative loophole is where many are being caught out. Historical administrative guidelines simply have not been updated to offer a fair interpretation of legislation.

We recognise this is a distressing time. If you’ve been moved to council tax, first determine the reason. Most cases involve not achieving the occupancy threshold, but errors in completing reporting forms may also be to blame. Calculations should begin from April 2022 and assess each 12-month period. If you fall short of the 182-day requirement in any period, you must remain on council tax until you can demonstrate compliance. If you now meet the threshold, calculate when you reached the required days. To qualify for business rates, you must meet the occupancy target in the previous 12 months. Although the VOA uses 1 April to 31 March for reporting, any rolling 12-month period can apply.If members believe they have a justifiable case for consideration of back dated bills, CLA Cymru advises members to contact their local authority not the VOA. As councils have the discretion to consider such cases. Once your qualifying date is confirmed, you may reapply to the VOA.

All members affected or confused by this issue are welcome to contact the CLA Cymru team for personalised advice and guidance.

Pembrokeshire County Council is also currently consulting on Council Tax Premiums for 2025. While no specific changes are proposed, last year's reduction of the second home premium from 200% to 150% remains fresh in members' memories. The consultation closes 31 August. You can view and respond to the consultation here.