Fears second home owners could cash in on coronavirus grants

Fears second home owners who used ‘loophole’ to avoid paying taxes on their properties could cash in on millions in coronavirus grants meant to help small businesses

  • Around 55,000 holiday home owners are eligible for £550million in cash grants
  • The Government is being faced with the prospect of closing the ‘loophole’
  • Second home owners have been found to have gained in Yorkshire and Cornwall 
  • Here’s how to help people impacted by Covid-19

Second home owners who avoid paying tax by declaring their property as holiday accommodation without letting it out are eligible for millions in Government coronavirus grants meant to support struggling small businesses. 

Fears were first raised after more than £30million was provided to holiday properties in Yorkshire through the scheme, which provides £10,000 grants to companies receiving small business rates relief during the pandemic.

Second home owners can receive the cash if they register their properties as self-catering accommodation and let it for at least 140 days per year. This allows it to be valued for business rates, but with no requirement for any letting to occur. 

Second home owners can receive the cash if they register their properties as self-catering accommodation and let it for at least 140 days per year (pictured, Runswick Bay in Yorkshire)

Rishi Sunak launched a consultation to close what the Government called a ‘loophole’ costing local authorities millions in late 2018.

The consultation warned that ‘the Government is concerned that owners of properties that are not genuine businesses may reduce their tax liability by declaring that a property is available for let, but making little or no realistic effort to let it out’.

Chancellor Rishi Sunak (pictured) is offering small businesses struggling with the pandemic £10,000 cash grants

It proposed a change in the rules in line with Wales, where a property must be let for 70 days per year to qualify. So far, no legislative changes have been made.     

Experts are now saying, as a result, that 55,000 properties across the UK which have been flipped from residential to commercial use stand to qualify for the £10,000 grants introduced by the Chancellor as panic swept the nation.

Real estate adviser Altus Group has warned these properties are eligible for £550million in state funding provided to keep the economy on life support.  

Altus Group, which based its figures on analysis of Valuation Office Agency statistics, told The Yorkshire Post there is no available data on how many second holiday homes are being genuinely let. 

Robert Hayton, head of UK business rates at Altus Group, thundered: ‘It cannot be right that second home owners, who make them available to rent for as little as 20 weeks a year, are set for cash grants, while many businesses who share space or those with business rates inclusive rents, are set to miss out.’ 

A UK Government spokesperson said: ‘Property owners will only be eligible for grants if they are paying business rates and their property is available to let commercially for at least 140 days in the year. These strict criteria will ensure that Government funding is directed to those who genuinely need it.’ 

Fierce calls for the Government to close the ‘loophole’ have been echoed in light of the revelation that holiday home owners claimed £50million in Cornwall.  

Five thousand lets in the county have claimed £10,000 each from the fund, which was set up to help minor firms survive the coronavirus lockdown.  

Cornwall councillor Cornelius Olivier branded the holiday home owners ‘greedy’ and called for the government to close the loophole letting them mask as small firms.    

Experts are saying that 55,000 properties across the UK which have been flipped from residential to commercial use stand to qualify for the £10,000 grants (pictured, Dartmouth)

The Post reported that more than £15million worth of support has been provided to holiday homes in Scarborough Council area, £5million has been provided in York, £3.8million in Richmondshire, and more than £2.4million in Harrogate. 

Leeds Council has provided £430,000 to 43 holiday lets in its area as part of £118million given to local businesses so far.

A spokesperson said: ‘It is an incredibly stressful time for small businesses and we are glad that the council has been able to move quickly to begin paying out grants.’  

The criticisms have been made at a critical time, as economic activity has slowed to a catastrophic all-time low since the ‘stay at home’ order on March 23. 

The Government was advised to pursue a lockdown policy after scientists from Imperial College presented statistical models which warned that half a million people in the UK could die with the coronavirus if no action was taken. 

Concerns are rising, though, of the severity of the economic damage which has followed the lockdown. Economists have estimated that shutting down a huge part of the UK economy is costing the country around £2.4billion per day.

The Government revealed that 4million workers have already been furloughed, while British Airways said 12,000 staff would be made redundant.

A Bank of England official recently warned that Britain could be facing the most severe economic contraction in three centuries. 

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