Second Welsh council considers moves to ease holiday let tax bills

A second Welsh council is set to ease council tax premiums on some self-catering properties amid concerns about mounting financial pressures on holiday let operators.

Powys County Council has backed plans to introduce a discretionary discount removing the premium element from backdated council tax bills, following similar concerns raised by Cyngor Gwynedd.

The proposal, agreed by Powys cabinet last month, will go before full council in May.

If approved, it would apply retrospectively to April 2023 and could result in substantial refunds for some businesses.

The move comes as pressure grows over the Welsh Government’s “182-day rule”, which requires self-catering properties to be let for at least 182 nights a year to qualify for business rates.

Properties that fall short are moved to council tax and can face second-home premiums of up to 300%.

The threshold is significantly higher than in England and Scotland, where properties need to be let for just 70 nights, raising concerns about competitiveness and the viability of some rural tourism businesses.

Welsh Government guidance allows councils to use discretion when applying council tax premiums, particularly where there is evidence of economic impact or hardship.

If implemented, Powys would become the first authority to remove premium charges from backdated bills while retaining the standard rate of council tax.

Figures suggest the policy is already having an effect. Around 40% of self-catering properties in Wales have failed to meet the threshold, while Powys has seen a 28% fall in properties listed for business rates since April 2023.

Similar trends have been seen in north Wales, where numbers of holiday lets registered for business rates have dropped sharply in recent years.

‘Struggling’

Gwion Llwyd, who runs Dioni Holiday Cottages and leads the Let’s Review 182 campaign, said: “What we’re seeing now is local authorities starting to respond to how this policy is working in practice.

“Many small businesses are struggling to meet the threshold not because they’re doing anything wrong, but because of the way the market operates, particularly in rural areas.

“Operators are facing bills they simply can’t afford, and we’re starting to see increasing numbers stepping back or closing altogether. That has real consequences for rural communities that depend on tourism.”

A spokesperson for Cyngor Gwynedd said the council had already made representations to the Welsh Government calling for the threshold to be reviewed and reduced.