Homeowners may already be feeling the sting when it comes to paying council tax as rates go up by around 5%. But, if you own a second home, can you avoid paying council tax on your second home?
New laws mean local councils can double, or even treble, the council tax paid on properties that are not your main residence.
Depending on what nation your second home is in, you could face a council tax rise of up to 300% after new laws passed in England, Wales and Scotland last year.
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Under the Levelling Up and Regeneration Act 2023, councils in England were given the power to vote to charge additional council tax of up to 100% on furnished homes not used as a main residence from April 2025.
Whether you will be affected depends on your local council.
Councils that have already voted in favour of increasing council tax on second homes include Bath and North East Somerset council, East Devon District Council, North Norfolk District Council and North Yorkshire Council. You can find out if your local council has voted on the matter by checking the council website.
If your local council decides to hike rates on second homes, it must give you a year’s notice before increasing your bill.
If your second home is in Scotland, then legislation passed in December 2023 means your local authority can charge you double council tax.
Welsh second properties could face an even bigger bill. In April 2023 the amount Welsh local authorities could add to council tax bills on second homes rose to 300%.
It’s a rule change that has split opinion. John O’Connell, chief executive of the Taxpayers Alliance argues: “Taxpayers are sick and tired of the endless fiddling with the tax system as a means to raise ever more revenue by stealth.
“Higher rates of council tax on second homes is just another example of bureaucrats and politicians at all levels of government focusing more on squeezing taxpayers than delivering public services.
“Council tax on second homes should be set at the same rate as that on every other property.”
At the other end of the argument Angela Kerr from the HomeOwners Alliance supports the tax change: “We think homes should be to live in, not investment opportunities. In a world where councils are strapped for cash and going bankrupt, it’s no surprise they will be looking to tax those that can afford the luxury of a second home to help boost their coffers and pay for local services.”
Most of the public support the change. A YouGov poll from February 2023 found that 59% of people were in favour of doubling council tax on second homes.
Targeting second homes makes sense for local councils. In the past decade the number of second homes in England has surged. Government data from the end of 2023 showed there were 482,000 second homes owned in England – up by almost 170,000 since 2010.
The big shift has been from owning second homes abroad to having them in the UK. In 2010, over half the additional properties owned by Brits were overseas – mostly in Europe, according to the English Housing Survey. But by 2021, that had flipped with three in five now in the UK.
When is second home council tax payable?
The general rules are a property is a second home if it is furnished but no one lives in it, or the owner has a main home elsewhere. But the rules differ for buy-to-lets, holiday lets, and empty homes.
Paying council tax on buy to let
If you own a second home that is a buy-to-let property in most cases you don’t pay the council tax bill. It is your tenant’s responsibility to pay, and they won’t be subject to the second home penalty.
The exception to this is houses in multiple occupation (HOM). This is where rooms in a home are let individually. In this scenario the owner is responsible for paying the council tax – although they may add it to the rental costs.
Do I pay council on an empty homes
A property that is empty and unfurnished for at least 12 months can be charged an empty homes premium in England – the rules differ in Wales and Scotland. This is 100% of your council tax if it is empty for over two years, but this can be cut to 12 months under the Levelling Up and Regeneration Act 2023.
If your home is empty for over five years the premium rises to 200% of your council tax, and 300% if the property is empty for over a decade.
Your home will be classed as empty until it has been furnished and occupied for more than six weeks in a row.
Council tax on holiday lets
Provided you meet the rules to be classified as a holiday let you won’t have to pay council tax on your property, instead you’ll pay business rates instead and can access small business rate relief.
In England, to be classed as a self-catering property a second home needs to be available for short let periods of at least 140 days in the tax year and have been let out for at least 70 days.
In Wales, a holiday let must be available for short lets for at least 252 days a year and rented for at least 182 days.
Scottish properties must be available for short lets for 140 days or more each year and let for 70 days each financial year.
How much will council tax on second homes cost?
The second home council tax premium is expected to raise over £100m a year for councils, according to research by the Local Government Chronicle. How much individual homeowners pay will depend on several factors.
- Where your second home is located
- What council tax band it is in
- Whether you are eligible for a council tax discount
In England, councils that vote in favour of the rule change will be able to double the existing council tax bill on a second home. The average annual council tax bill is £2,171, according to Gov.uk. So, you could expect to pay around £4,342 a year on a second home.
However, you may get a discount on this. If your second home is a family annex it may be eligible for a 50% council tax reduction. Single occupants can usually qualify for a 25% discount – this includes people who live with under 18s or people in full-time education.
Can I avoid paying council tax on a second home?
If you want to avoid paying the second home premium on council tax you have a few options.
The simplest way to avoid it is to sell your property. Alternatively, you could turn your second home into a holiday let. If it is available for short term lets for at least 140 days of the year and let out for 70 days, you could still enjoy your home for almost two thirds of the year. This would mean you wouldn’t pay any council tax on your home, instead you’d pay business rates, and this could be far less than your existing council tax bill.
Certain groups will also be exempt from the second home charge. Properties that are uninhabitable due to extensive renovation or cannot be used year-round due to planning restrictions will be exempt. Inherited homes are also exempt for the first year while probate is dealt with.
Individuals may also be exempt if their employment means they can’t live in their second home. For example, pub landlords who must live on the premises, practising reverends and residential school caretakers.
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