HOLIDAY LETS: 182-day tax rule could be eased as ministers launch review

The tax rule blamed for squeezing self-catering businesses across Gower, the Carmarthenshire coast and Pembrokeshire is being looked at again, with the minister in charge acknowledging some genuine businesses cannot meet it.

The Welsh Government has launched a 12-week consultation on the 182-day letting rule, which decides whether a holiday let pays business rates or council tax.

Since April 2023, a self-catering property has had to be available to let for at least 252 days a year, and actually let for at least 182, to qualify for business rates.

Fall short and it is classed as a domestic property, leaving owners facing council tax and, in some counties, a premium on top.

The consultation asks whether 182 days is set at the right level and what impact a “modest reduction” would have.

Five new exemptions are also proposed, for properties the Welsh Government says could not reasonably be used as a permanent home.

They would cover properties that are part of a wider business, large multi-unit properties, those subject to a planning restriction, those within the grounds of the owner’s home, and those on the owner’s farm.

Cabinet Minister for Finance Elin Jones said she had “heard representations from a number of businesses that are making meaningful contributions to their local economies but are unable to meet the current threshold”.

She said: “I am committed to getting the balance right, keeping homes in our communities while giving tourism the support it needs to thrive.”

The 182-day rule was brought in after the number of self-catering properties paying business rates almost trebled in a decade, from around 4,000 to more than 11,000 by 2023, which the Welsh Government said raised concerns about over-supply in some areas.

When it took effect, operators told of the rule causing “soul crushing distress”, with critics warning genuine businesses in coastal Wales would be pushed under.

It is the second time in a year ministers have consulted on softening how the rules are applied, after proposals last August aimed at giving the sector “extra stability”.

Falling foul of the threshold carries extra bite in Pembrokeshire, where second homes pay a 125% council tax premium. The county is currently consulting again on the future of that charge.

The consultation runs until 23 October, with the Welsh Government intending to complete its review of the threshold by the end of 2026. Any change would need legislation, with a planned start date of 1 April 2027.

Responses can be submitted on the Welsh Government website.