Cornwall MPs advocate for closing the tax loophole on second homes. – TNT

Cornish MPs are preparing legislation to close a loophole that allows second home owners to avoid paying higher council tax by switching to business rates, The Telegraph has reported.

The move follows the introduction of a 100% council tax premium on second homes in Cornwall on 1 April, which has seen some households hit with annual bills of nearly £5,000. More than 13,000 properties in the county are registered as second homes, according to the local authority.

Under current rules, second home owners who let out their property for at least 70 nights a year can register for business rates. If they own just one property, they are often eligible for small business rates relief, significantly reducing their bill. Business rates are based on the property’s rateable value, not council tax bands, and typically cost less.

Ben Maguire, Liberal Democrat MP for North Cornwall, told The Telegraph he is leading the bill, which would stipulate a requirement for planning permission to convert homes into holiday lets or non-permanent residences. “I have dubbed it the ‘Airbnb Bill’,” he said.

The proposals, backed by other MPs in the region, aim to curb the number of properties being moved into the short-term rental market to avoid council tax. Maguire said the bill is designed to bring greater oversight to the conversion of homes and prevent new developments in low-income areas from being snapped up as second homes.

Andrew George, MP for St Ives, told The Telegraph he first raised concerns about the loophole more than a decade ago and warned that small business rates relief had become a route for second home owners to reduce their tax liability.

The Telegraph reports that the government has confirmed it is considering further action and said it remains committed to addressing the impact of second homes and short-term lets on local housing markets.