Britannia Radio

SECOND HOME OWNERS LOSE THEIR TAX LOOPHOLE

Communities Secretary Eric Pickles

Sunday October 30,2011

By Kirsty Buchanan

SECOND home owners and banksholding on to empty properties are set to lose their council tax perks under Government plans due to be unveiled tomorrow.

Communities Secretary Eric Pickles will announce a shake-up aimed at putting more homes back on the market and keeping down council tax bills.

At present banks are exempt from paying council tax on properties they have repossessed. This means they are often content to keep them empty as they wait for prices to rise, instead of putting them back on the market to provide a desperately needed home for a family.

With an estimated 870,000 empty properties in Britain, Mr Pickles is keen to see that those sitting on repossessed homes should not escape tax-free.

Closing this loophole and forcing second home owners to pay full council tax will help him fulfil the pledge at this month’s Conservative conference that council tax would remain frozen for a second year in 2012.

The proposals will be outlined in a consultation paper tomorrow. Last night Mr Pickles said: “Under Labour, council tax went through the roof. This Government has scrapped Labour’s council tax revaluation and is helping freeze council tax for two years.

“I want to do more to help everyday families with the cost of living, and protect family homes from tax increases.

“By removing the subsidised tax breaks for empty homes and second homes, we can cut £20 a year off families’ council tax bills by treating everyone equally and fairly.

“Councils should also make it easier to pay bills, and offer the same discounts for electronic billing that other companies offer as standard.”

Second homes currently receive discounts of between 10 and 50 per cent, while owners of empty homes can get discounts of up to 100 per cent.

However Mr Pickles stressed that the changes would not mean ending tax relief on homes that are empty because the occupier has moved into a hospital, a care home or has died.

Those who have moved out temporarily to help care for someone will also not be penalised.

The paper outlines plans for more flexibility on council tax payments. Those left struggling by the recession may be able to spread payments over 12 months instead of the current 10 months.

Mr Pickles also intends to end the possibility of “granny flats” being taxed as separate dwellings.

At present there are exemptions if the occupiers are relatives of the main home owner, but if they move out and a non-relative moves in the annex can then attract a separate tax.