The Great Tax Escape: Holiday Homes Dodging Council Tax and Costing Councils £334M
A hidden loophole is letting holiday homeowners in the UK dodge council tax and it’s costing taxpayers a staggering £334 million every year. How? By renting their properties out for just 10 weeks annually, these savvy landlords classify their homes as small businesses, escaping both council tax and business rates altogether.
New rules aimed at hitting second homeowners with double council tax are backfiring spectacularly. Instead of paying more, many owners are “flipping” their holiday homes into the business rates system, exploiting a loophole that leaves local councils scrambling for lost revenue.
The impact is especially dramatic in Cornwall and the southwest, where over 10,700 properties avoid all taxes, costing councils £52 million annually. Across Cornwall, Devon, Dorset, and Somerset, more than 21,000 holiday lets enjoy full business rates relief, draining over £105 million from local coffers that could have funded vital services.
John Webber, head of business rates at Colliers, warns doubling council tax isn’t the magic fix everyone hoped for. “Offering double tax or no tax just pushes more owners to switch to business rates, making the problem worse,” he says. Meanwhile, locals still struggle to find affordable homes, and local businesses suffer as second homeowners pull back.
The real issue? A system riddled with loopholes and a lack of political courage to tackle them. If councils charged holiday lets fairly, they could raise millions to build affordable housing and support communities instead of watching money slip through their fingers.
Until real reform happens, holiday homeowners will keep “flipping” their properties, and councils will be left fighting a losing battle in the fight for fair taxation and housing justice.
