Cabinet to decide on 75 per cent Council Tax premium for second/holiday homes

Second and holiday home owners in Powys could be face with a council tax hike if plans are approved later this week.

Powys County Council’s cabinet will be asked to look at the findings of a consultation and decide whether to go ahead with introducing a 75 per cent premium or keep it at 50 per cent.

If approved at Friday’s (February 4) meeting, it would come into effect from April 1, 2023.

The rise was agreed at a full council meeting in September 2020 and then went out to consultation late in 2020.

A report which will go before the Cabinet explains that the increase could bring in an extra £350,000 to the authority’s coffers.

But the risk it carries is that second/holiday home owners could carry out the threats of moving to business rates – as 12 per cent of them suggested in the consultation – and as a worst-case scenario Powys could lose out on £620,000 of council tax.

Head of finance, Jane Thomas said: “I note the potential gross additional council tax revenue generated by increasing the premium.

“However, there is significant risk that the action of owners as a result of increasing the premium would limit or eliminate any of this gain.

“The proposal to implement the change from the April 1, 2023 provides sufficient time to assess this potential impact fully, and it will also allow time to consider the outcome of the Welsh Government consultation and any potential changes that may be imposed.”

The report says that increasing the premium to 75 per cent will increase the average council tax for each of 1,311 identified properties, to £3,310.45

At the moment their property owners are paying an average of £2,837.53 in council tax under the current 50 per cent premium.

The proposal was raised at a recent meeting of the Finance Panel by Plaid Cymru group leader, Cllr Elwyn Vaughan during discussion of the council’s draft budget proposals for 2022/22 when he asked why a decision agreed by the full council 18 months earlier had not been implemented.

Finance portfolio holder Cllr Aled Davies said there was a need to wait for the outcome of a Welsh Government consultation.

Cllr Davies worried that without legislation, implementing the increase would destabilise the tax base and see a shift of holiday/second homes into the business rates section.

Business rates while collected by local authorities are set by the Welsh Government. The government receive the money and re-distribute it back to councils as part of the annual local authority financial settlement.

The consultation received 780 responses with 74 per cent of those from second/holiday homeowners.

Cllr Vaughan is expected to speak in favour of the change at Friday’s meeting.