Changes proposed to Wales holiday let tax rules

Controversial tax rules for owners of self-catering holiday accommodation in Wales look set to change following proposals put forward by the Welsh government.

Since 2023, self-catering properties must be available for 252 days and let out for 182 days each year to pay non-domestic rates instead of the higher council tax.

The Welsh government is now proposing changing this to an average of 182 days let over several years.

Cabinet Secretary for Finance and Welsh Language Mark Drakeford said the Welsh government had "listened" to feedback and was proposing "small changes" to the rules.

Drakefords plans were criticised by Welsh language society Cymdeithas yr Iaith.

The campaign group said the Welsh government should be "focusing on the housing crisis" rather than changing recent legislation which the "majority of businesses are complying with".

The Professional Association of Self-Caterers (PASC) also criticised the latest announcement, calling it a "token gesture that fails to address the real crisis facing Welsh tourism businesses".

What are the rules around holiday lets in Wales?

Previously, properties made available for let for at least 140 days - and actually let for 70 - qualified for lower business rates rather than council tax.

That system still operates in England.

However, in Wales properties now need to be made available for at least 252 days, and actually let for 182.

If not, they can be classed as second homes and liable for council tax - which in some areas means paying an additional premium.

The new proposals would allow for up to 14 days of free holidays donated to charity to count towards the 182 day target.

A consultation, open until 20 November, asks whether councils should consider giving businesses more time to adjust, such as a 12-month grace period before they may have to pay higher council tax rates.

Subject to the outcome of the consultation, the legislation would need to be passed in the Senedd to implement these proposals, with changes intended to take effect on 1 April 2026.

Drakeford said: "Wales has so much to offer, and we want to ensure we realise that potential in a way that achieves a balance between our communities, businesses, landscapes and visitors.

"We work closely with tourism and hospitality businesses to help address the challenges they face, while ensuring everyone makes a fair contribution towards local economies and funding public services.

"While most holiday let owners are already meeting the new rules brought in from 2023, with 60% of properties meeting the letting criteria, we have listened to those working in the sector and are proposing small changes to the current rules to support them."

But director of PASC UK Cymru Nicky Williamson said "whilst members will welcome the ability to count charity weeks again, this is nowhere near enough".

She added: "For three years we have continually presented the Welsh government with data showing the damage caused by this policy - yet they continue to ignore the reality.

"Tourism in Wales has lost over a quarter of its overnight visitors since this policy began, yet the threshold for businesses hasnt changed, leaving owners punished for something completely outside their control.

"Business owners are working harder than ever just to stand still, with 85% driven to discount to try to achieve the threshold.

"The 182 threshold is the problem and this must be reduced significantly."