Anglesey Council may need to refund council tax due to holiday let rule changes and anticipated owner appeals.
The council discussed this during a budget meeting on February 18, noting an extra £432,000 in council tax revenue this year. Usually, this amount decreases as people claim eligible discounts.
New regulations altered the classification of properties for tax purposes. Self-catering accommodations were shifted back to council tax, boosting revenue from second homes as the council encourages owners to rent their properties. Fewer properties paying this tax could be next because of appeals.
Welsh rules, effective from April 2023, stipulate that holiday lets must be open for 182 days to qualify for business rates. Consequently, many properties were reclassified to council tax, often backdated to April 2023.
Many owners are likely to appeal these changes, seeking to revert to business rates. Owners will try to achieve the minimum occupancy to maintain business rate status. This could also move properties back.
Therefore, the council anticipates potentially significant council tax refunds in 2025/26. The £900,000 fund was established to cover these potential repayments.
Marc Jones, a council officer, stated in the meeting that tax amounts could increase significantly. He foresees numerous appeals and owners potentially increasing rental activity to qualify for business rates.
Jones added that some of the additional tax revenue will likely be returned. The council has allocated reserves in preparation. The officer affirmed the council’s current stable position, indicating a good budget outlook for 2025/26.
The report highlighted staffing changes within the team, enabling more effective identification of tax avoidance.
Instances of improper discount claims are prevalent, with individuals often failing to notify the council of changing circumstances. Similarly, second homeowners may neglect to declare that a property is not their primary residence.
This enforcement work influences the total tax revenue collected by the council. It impacts both standard council tax and the second home premium.