‘Shocking injustice’ as second home owners in Wales can claim coronavirus business grants

Abersoch, which is popular with second home owners. Picture by Ken Doerr (CC BY 2.0)

An MP has condemned as a “shocking injustice” the revelation that second home owners in Wales can claim grants intended to support businesses in the country.

Firms employing fewer than nine people can apply for £10,000 grants as part of a £1.1bn Welsh Government package.

A growing number of second homes are registered as businesses as councils can raise a premium on council tax on second homes.

Dwyfor-Meirionnydd MP Liz-Saville Roberts condemned the development.

“Why should second home owners who’ve flipped to business rates – and pay nothing – to avoid council tax get £10k hand-out from a coronavirus support grant, ⁦Welsh Government?” she tweeted.

⁩”Our communities need leadership, not shocking social injustice .”

Arfon Assembly Member Sian Gwenllian also called on the Welsh Government to change the rules.

“Unless the Labour Government in Wales changes the rules, millions of pounds will be paid out in Covid grants to second home owners,” she said. “They have a moral obligation to put an end to this at once.”

Gwynedd has about 5,000 second homes and the council estimates the owners of between 1,500 and 1,800 of them may be registered as businesses.

 

‘Bonkers’

Elwyn Vaughan, who represents a ward in the Dyfi Valley in Powys Council, told the BBC that second home owners were in the process of claiming the £10,000 coronavirus grant.

“It could mean around £2.5m paid out to these holiday homes which is a stark raving bonkers situation.

“The money should be there for genuine, small businesses of which Powys has a wide range of companies like that which should be benefiting from these grants.”

The same issue has arised in Cornwall where former St Ives MP Andrew George argued that the government was about to give “generous handouts to wealthy second home owners”.

Mr George said: “Under the radar of last week’s Budget the Conservative government quietly slipped out a hand out of £21 million to Cornwall and Scillies’ second home owners while low-paid workers and self-employed are left to struggle without help.

“The owners of the 7,000+ second homes in Cornwall and Scilly who’ve opted to use the tax dodge ruse available through the business rating system to avoid paying any tax at all on their desirable property investments will be given another coronavirus handout.”

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RhosdduMiranda HurlockGerChristine LannaghanKate Telford Recent comment authors
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Huw J Davies
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Huw J Davies

“Gwynedd has about 5,000 second homes and the council estimates the owners of between 1,500 and 1,800 of them may be registered as businesses.”

Any reason why the council doesn’t seem to know how many second homes are registered as businesses and provides a guesstimate? Surely someone must have counted them already? £300k could make the difference between some real Welsh businesses surviving or vanishing.

Mae’n braf cael byw mewn ty haf… as one of my namesakes used to sing!

Huw Davies
Guest
Huw Davies

I wasn’t that singing namesake mentioned above ! but …… You make a good point about the quality of information regarding the second home/holiday home issue. A council should know from its databases which category any premises falls into. It should have a record of any transfer from one class of property to another – such as a shift out of a council tax band into a business rate band. Add to this any information HMRC can provide regarding gross turnover, allowed costs and taxable profit straight off owners’ year end tax summaries and you have a pretty good read… Read more »

Jonathan Edwards
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Jonathan Edwards

Second home – bad eh? My county of Pembrokeshire has a kind of second home council tax. But of course we need a properly functioning Parliament for Wales to get anything serious done. How strong are nationalist AMs and MPs in NW and SW Wales? NW is fine. South West Wales ie Pembrokeshire has Con AM and Con MP. Nationalists have had since 1936 or thereabouts (when my 98yr old mother was 15 and taught by DJ Williams) to win this area for heaven’s sake. Pembrokeshire people had an Independent MP at one time. So its doable – but the… Read more »

John Young
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John Young

I’m certainly no fan of Welsh Labour but i’d like to understand what exactly it is they are able to do within the confines of the devolution agreement. If a second home owner decides to register that home as a business is there any way the Government or the local council can refuse ? If it meets whatever the criteria are then how can they ? And if they ARE eligible to declare as small businesses how can they be denied the same support as any other small business. Most of us know very little about the legalities of any… Read more »

Nigel Callaghan
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Nigel Callaghan

Yet community businesses and other social enterprises which get discretionary rate relief (as non-profits) DON’T (currently) qualify for the £10K/£25K as that is only available to businesses that get Small Business Rate Relief.

The rules must be changed at once!

Kate Telford
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Kate Telford

They have to have a VAT number relevant to the claim

Kate Telford
Guest
Kate Telford

They have to have a VAT number to claim

Christine Lannaghan
Guest

Ian welsh born and bred and run a successful B&B . Because it is our main home and we pay council tax , we do not recieve any help at all . We can’t apply for income support because if our age ! The only thing we can do is apply for a loan ! We had thousands of pounds of forward bookings all of which we have lost

Ger
Guest

Insanely incorrect, surely,,, it’s ripping off the poor taxpayers to reward the better offs…,,,

Miranda Hurlock
Guest
Miranda Hurlock

I have a holiday cottage which qualifies for small business rates relief. In order to qualify i had to provide our local council with details of availability and bookings and meet certain criteria over the course of the year. In other words there were stringent checks into our cottage business before we received rate relief. The £10,000 grant is a tremendous help after losing our only source of income from visiting guests. The cottage has not once been used for our personal pleasure. It offers accomodation to tourists that visit our beautiful town and also spend their money there. I’m… Read more »

Rhosddu
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Rhosddu

Then you are not talking about a holiday home for your personal use but a legitimate small business, and are therefore outside the the area of discussion here. The issue being discussed is the non-locals who bend the rules by doing a token let of their property in order to practice tax avoidance but who otherwise have the use of that property whenever they decide they need a holiday.

Miranda Hurlock
Guest
Miranda Hurlock

My point being, getting your property second home/holiday cottage whatever registered for small business rates relief means you have to prove you have had the property available to let for min of 140 days , and you have to prove it has been let for no less than 70 nights.. Only when this criteria has been met and supported with evidence may you receive small business rates relief. If and only if (as I understand it) that is the case, the grant is offered. If you just have a holiday home that you use, friends use or you let it… Read more »

Rhosddu
Guest
Rhosddu

The AMs are arguing that the grant should be reserved for local small businesses whose income is entirely dependent on the success or survival of that business. The kind of set-up you are referring to is a house purchased by a non-resident who rents it out for just over two months in the year as a means of getting extra unearned income., with no tangible benefit to the local economy.