Embargo: Thursday, June 30, 2022
Three trade associations representing professional self-catering businesses in Wales are to meet a Welsh Government Minister to try to thrash out a solution to what they describe as “punitive” tax changes due to be introduced next April.
Wales Tourism Alliance, The Professional Association of Self Caterers UK and UK Hospitality Cymru have warned that the tax changes could force as many as 30% of self-catering businesses to close or sell up.
They hope to meet Rebecca Evans, Minister for Finance and Local Government, early next month.
Their mission is to “protect real Welsh self-catering businesses” as the Welsh Government proposes stricter rules on accommodation qualifying for business rates rather than council tax.
Currently, self-catering properties in Wales must be available to let for a minimum of 140 days in any 12-month period, and actually let for at least 70 days to qualify for business rates rather than council tax.
Under the new proposals, properties must be available to let for at least 252 days and actually let for at least 182 days to qualify for business rates – an increase of 160%.
From April 2023, a self-catering business not meeting the new threshold would incur council tax as a second home, instead of business rates. Welsh county councils will have the power to increase council tax on all these businesses by up to 300%.
The Welsh Government has opted to press on with the tax plans despite receiving evidence of damaging impacts from the three trade associations who surveyed more than 1,500 self-catering businesses across Wales.
In a joint letter to the Welsh Government, the associations say they are “hugely disappointed” that their evidence had been ignored.
“This all-Wales, one size fits all approach takes no account of the different kinds of businesses that operate in a seasonal Welsh tourism year,” they say. “Nor does it respond to the fact that the problem this proposes to solve does not affect the whole of Wales, something the Welsh Government has, itself, recognised.
“Our data shows that more than 30% of professional, local self-catering businesses will face having to sell or close because of this legislation. These are not second home owners.
“We are now asking the Welsh Government to formally sit down with us to review and agree what the essential and justifiable exemptions and mitigations might be, in order to ensure that real businesses are not caught in the consequences of this new threshold.”
The associations are asking for a transition period of two or three years to introduce the changes, up to 18 exemptions and dispensations for businesses carrying out repairs and refurbishment, property improvements or being forced to close due to ill-health or caring responsibilities.
They also want self-catering businesses to have an appeal process against the 182-day threshold in exceptional circumstances.
They raise important questions about how councils plan to tax properties that it currently doesn’t know about, such as those relying solely on online listings with global companies.
Other queries surround how letting days will be calculated, what is the commercial rate for letting a property, Council Tax rating on businesses with multiple units and taxing pop-up businesses.
Notes for Editors:
The exemptions the three associations are calling for are:
1/ Properties that are limited by planning permission to only be short term commercial lets.
2/ Properties that lie within the curtilage of an owner’s primary residence.
3/ Owners who have multiple units on one site, (e.g., a holiday cottage complex) can average occupancy across the units.
4/ Farm diversification businesses.
5/ Where the units are not housing stock withdrawn from the market but can be proved through recorded planning and building control that they have been created from vacant commercial or agricultural buildings.
6/ Exemptions for cottage businesses that are in effect "small resorts" or complexes. Sites that have multiple units on site owned by the same person, where facilities are provided for and shared by those staying on site. For example, if have pools and games rooms, gyms, a play area, coffee shops. The practicalities (or even the ability) to actually split a business where some cottages would meet the new 182-day criteria and others wouldn't, would be basically impossible.
7/ Where the property is run by a charity.
8/ Weeks given by owners to raise money for charities should count towards days let, max two weeks per year (Either for Charitable status or Not for Profit).
9/ Where the accommodation is a supplementary part of a bigger business, events, weddings etc.
10/ If your short-let business is VAT rated
11/ Formal review of 182 days if Wales officially goes into recession.
12/ Pandemics or forced local closure
13/ Period of grace for new business entrants who would not get to 182 days in the first crucial years
The Wales Tourism Alliance (WTA) represents around 7,000 businesses in all sectors of tourism industry across Wales. www.wta.org.uk .
UK Hospitality Cymru’s members employ around 140,000 people directly in the hospitality industry in Wales and a further 40,000 supply chain employees indirectly.
The Professional Association of Self Caterers UK is the largest association representing the professional self-catering sector in England and Wales. It has more than 1,300 members and represents more than 50,000 letting properties. www.pascuk.co.uk
For more information, please contact:
Wales Tourism Alliance
Chair: Suzy Davies
Tel: 07540 964678
The Professional Association of Self Caterers UK
Chair: Alistair Handyside, MBE,
Tel: 07771 678028
UK Hospitality Cymru
Executive Director for Wales: David Chapman
Tel: 07753 752084