The desirability of a crash pad residing in the heart of the bustling city or a holiday home on the coastline of the UK has had many residents sitting well to get a second home. For most, the primary home is the place they live in and return to from work. However, a second home is more than an asset for those seeking an escape, having inherited a property, looking to increase their long-term revenue, and looking to expand their portfolio.
The problem is when a property runs out of use for a lengthy time or comes second to another one. Then, in most cases, the owners of the homes and livable residences in question will have to pay more on the assets compared to the tax already charged for the primary property. This law has been in place since 2017, but it’s the current moment that home proprietors need to prepare themselves for the upcoming verdict on how residency council taxes will change.
The second Home Council tax bill to expand starting with the inception of 2024
Under the Levelling Up and Regeneration Bill of the government, local councils will receive the right to double the council tax applied for fitted homes where no one is living or which serve as second homes. This means that regardless of how welcoming your second home is, whether it has a few cabinets or if the HVAC system functions properly, you’ll be subjected to pay the local council taxes established by the office.
This means that thousands of pounds will be payable over the years for many proprietors in the UK, starting in April of the following year. However, the local council taxes will differ from county to county, as you’ll get to see. The upper limit for charges imposed by a local council in Wales has been established at 300%, or three times the main property’s tax, with Lewes serving as a reliable example. For homes serving as holiday lets, for instance, the law differs and charges the owner after calculating factors like location, size, quality, or the profit benchmark potentially made from renting.
The safest move one can make is to check the local law on taxes online or at the official counter and use a broker’s expertise, should they be torn between liquidating their property or not, and under which circumstances.
Lewes to pay 300% more on second and long-term empty homes
During discussions of the most recent meeting between the cabinet councillors of Lewes District Council, most members agreed on recommending an increase that would establish the council tax on second or long-term empty households at 300%. The law will go into effect in April, and premiums will differ depending on some criteria. For instance, premiums will start at 100% for uninhabited households or partly furnished for between 1 and 5 years. Having a few old cabinets or a dove grey kitchen may or may not have you fall under this category, and the criteria must be more deeply examined.
Furthermore, households going unfurnished for five to 10 years will be taxed 200%, whereas those exceeding ten years since they’ve been empty will be charged the maximum amount of 300%. These modifications are now under the umbrella of propositions and will further be established and introduced to a larger audience.
The recommendations from the council’s cabinet might have owners of second homes charged twice as much starting in April 2025. The main purpose of the amendments is to reduce the financial burden for those vulnerable who have received the hardest hits from the current rising cost of living. The scheme is aimed at helping the residents falling under this category throughout 2024 and 2025.
Pembrokeshire stands at 200%
On the other hand, Pembrokeshire has recommended council tax rises to not exceed 200%. Proprietors of second or long-term uninhabited properties in the county might only pay a 200% council tax premium once the law goes into effect.
Several months ago, new rules from the Welsh Government had local authorities able to gather premiums accounting for up to 300%. Currently, the county has a 100% council tax premium charged from owners of second homes, outpacing the 50% tax established in 2017.
Ceredigion follows suit
Similar to Pembrokeshire, those who own furbished properties or go uninhabited for over two years will see local council taxes reach as much as 200%. Next week, a meeting will be held to establish whether those owning second homes will be taken a treble council tax rate.
Tax premiums in Ceredigion might rise to 100%, further extending to 150%. The first tranche may go into effect starting with the first of April 2024, whereas the second one will follow suit in April 2025.
Taxes differ from case to case, so further research is recommended to determine where each case stands.
What is the council tax all about?
The council tax isn’t an out-of-the-blue created tax but has been around for a while. These days, cabinet councillors in UK counties are making amendments to the existing law structure and establishing a higher tax coming in the form of a percentage for properties that remain unused for over two years, as well as those that rank second on the list of properties owned in the country. It represents a yearly taxation, usually released in April, that splits the payments over ten months. One will have to rent or own a property and be over the legal age of 18 to be burdened under the existing law.
Furthermore, one is the subject of payment when they’re sheltering a minimum or more than two “liable adults” under their property’s roof, with the exception of students or mentally impaired individuals.
Residences with just a liable adult are charged 25% less, and those with no accountable adult are discounted 50% of the total fee.
What qualifies as a second home? Can discounts be offered?
Whether you’re contemplating adding a second residence to your portfolio or are poised to inherit one, it’s crucial to know what properties fall under the “second-home” classification umbrella. Second homes are primarily regarded as furnished properties that don’t come first on the list of owned assets or are uninhabited.
Most of the time, one has to pay the whole council tax on this type of property together with the contributions for the main household. However, as you’ve seen above, the council can tax different sums depending on the laws of the local council assigned to the property.
Most councils aren’t offering discounts for these properties, but there are some instances when the owner might be charged less, such as:
The payer is, under the terms of their job, compelled to reside elsewhere (e.g. a caretaker)
The property is either a mooring designed for a boat or a pitch busy with a caravan.
Closing words
There’s a higher council tax on second or long-term empty homes in the UK, aiming at helping those financially vulnerable because of the current crisis on the back of rising living costs. Prepare in advance to not be taken aback by the growing taxes and seek expert financial help if the situation feels over your head.
