New law: second homes. Avoiding double community charge

Powellj3

In certain Welsh counties they are debating the introduction of double rates on second homes and empty homes. This raises some interesting challenges about how it can be avoided on my home.

1) is it possible for my wife and I (happily married) to register two different houses as our place of residence. If not. How about registering the less commonly occupied property as our primary residence. What should we consider? I'm old enough not to worry about school catchments for my kids, but what other issues will be affected? I would actually like to have the opportunity for one of us to have a say in local elections

2) what about registering the second home as a business. Many family members borrow it and several friends. It gets quite busy in the summer. We accept "gifts" from visitors but far from a going rate rent. Certainly I wouldn't want to accept bookings from unknown persons. Could I still register it as a business and run at a regular loss?

Thanks all

Jonathan

HappyMJ

Community Charge....are we back in the 90's?

You can register each as your primary home and get a single persons discount on each property. You actually got to live in it as your primary residence though. You can't just say it.

Register it as a business and you can pay council rates instead. Would you like to register it as a holiday letting business? That's fine. Make sure you meet all your obligations in regards to holiday lettings.

booksurr

LOL, HappyMJ has been at the happy juice again.

you are married. Unless you can bring witnesses to the fact that you no long live together as man and wife (ie you've split up and probably heading to divorce) the automatic assumption is a married couple has one main residence and it is the same for both of them. The exception would be if you can obviously show that you lead effectively separate lives because one lives and works in one place whilst the other lives and works in the other place - only then could you claim SPD. Try that without those facts and it would be CT fraud.

no you cannot register it as a furnished holiday let unless it actually operates as one - the base rule being it must actually be let to fee paying people for a set number of days per year. Your "gifts" are presumably the way you fiddle your tax, so I doubt you'd be happy to go down that route as they will not count towards the criteria

both of you are perfectly entitled to be on the electoral role at both places simultaneously. You cannot by law vote in Parliamentary or EC elections, but can vote in local elections in both places if you wish.

you can't "register" your main residence for the purposes of council tax, it is a question of fact , not what is on paper. Very obviously the facts will not support your case as you so clearly show by your questions.

Powellj3

It would seem that registering separate primary residences for each of us is out then. But registering the Pembroke residence as our primary residence would mean that we wouldn't get the punitive rate there and pay the standard rate in our weekday home.

The "gifts" certainly aren't a tax fiddle. They are exactly as stated. Family and friends pay what they can afford without any suggestion from us as to a "rate". One of our nieces and her family would not get a holiday without it and their "gift" would barely cover gas and electricity.

If we did register it as a holiday let business we would register it in my wife's name as she has no other income. We would happily rent it to family and friends for a trivial rent in the hope of offsetting some of the running costs. We would not want to rent it on a commercial basis because it would mean we couldn't leave our personal stuff there and would not be able to.enjoy it for ourselves when we want to. Which after all is why it exists.

Pixie5740

But the Pembroke property is not your primary residence.

AdrianC

There is a very easy way to avoid paying the second-home rate of council tax.

Don't have a second home.

It's a bit like saying "There's an easy way to avoid paying the 5p carrier bag charge - take your own carrier bags", but that's for a good reason - because the charge is intended to dissuade people from doing what you're doing, and killing communities. Either pay the extra, or sell the second home.

Ozzuk

You are taking money in exchange for the use of your property, I'm pretty sure that is tax fiddling (if not declared). Even if no tax payable you should still be declaring it. Calling it a gift that coincides with them staying at your property fools no one.

I used to run a holiday let business, was a few years ago but I'm pretty sure business rates were more than council tax rates. Hopefully as you say increased income would offset that though. Could also be CGT implications (or whatever they call it now).

booksurr

Powellj3 wrote: »

It would seem that registering separate primary residences for each of us is out then. But registering the Pembroke residence as our primary residence would mean that we wouldn't get the punitive rate there and pay the standard rate in our weekday home.

you cannot legitimately register it as your main home on the evidence so far provided in this thread, it patently is not, as a matter of fact, your main home

legal precedent: Horsham v Williams 2004 "The judgement held that the starting point, when deciding on a person’s main residence, should be to consider whether or not a person was physically resident at a property. If they were, all the other factors should be considered, without placing too much weight on any one factor, and a decision made based on the balance of the evidence"

Cox. v. London Southwest Valuation Tribunal & Poole Council 1994 - held that the marital or family home is the main residence in the absence of other deciding factors.

Codner v. Wiltshire 1994 - held that it was inappropriate to base decisions purely on the amount of time spent at a property.

Mullaney & Clayton v. Watford 1997 - held that the place where a person sleeps is a pointer to that property being their main residence.

other evidence used to assess....
A person does not necessarily have to be physically present at an address all the time for it to be their main residence. We have to look into the circumstances at each address. The things we have to take into account are:

• whether they physically reside at each address
• the reasons why they have two addresses
• where their wife, husband or partner lives, if they have one
• where their children live, if they have any
• their legal tie to each address
• where they keep most of their belongings
• whether they intend to return to one address eventually
• whether anything prevents them from returning whenever they want to
• which address seems to be their most settled home

Powellj3 wrote: »

The "gifts" certainly aren't a tax fiddle. They are exactly as stated. Family and friends pay what they can afford without any suggestion from us as to a "rate". One of our nieces and her family would not get a holiday without it and their "gift" would barely cover gas and electricity.

If we did register it as a holiday let business we would register it in my wife's name as she has no other income. We would happily rent it to family and friends for a trivial rent in the hope of offsetting some of the running costs. We would not want to rent it on a commercial basis because it would mean we couldn't leave our personal stuff there and would not be able to.enjoy it for ourselves when we want to. Which after all is why it exists.

the gifts are undeclared income (or benefits in kind) you receive from letting your property, unless they are declared as such you are fiddling your tax. Just the same as you are looking to avoid council tax.

Of course the reality would be you would not have any tax to pay since your costs presumably exceed the value of the gifts so you are making a loss and therefore cannot be taxed on a loss

as said you cannot register it as a FHL unless you let it on a commercial basis...

• ‘Commercial’ means let on a commercial basis and with a view to making a profit. Close season lettings may produce no profit but normally help towards the cost of maintaining the property. This letting can still be treated as commercial. On the other hand, lettings to friends or relatives at zero or nominal rents are not commercial.
• the accommodation is available for commercial letting as holiday accommodation to the public for at least 210 days
• the accommodation is commercially let as holiday accommodation to the public for at least 105 days

mumps

How does it work for people who work away from home? My husband had to work in London for 2 years and had a flat there. We always regarded our home as his main residence even though during those two years he slept more nights in London than at home? Thinking about it didn't alot of MPs have more than one home and swap which one was the main residence?

Sorry, just thought that isn't really relevant to the OP.

booksurr

mumps wrote: »

How does it work for people who work away from home? My husband had to work in London for 2 years and had a flat there. We always regarded our home as his main residence even though during those two years he slept more nights in London than at home? Thinking about it didn't alot of MPs have more than one home and swap which one was the main residence?

Sorry, just thought that isn't really relevant to the OP.

read my post above, it answers your questions

the MP "thing" relates to Capital Gains Tax not council tax

AdrianC

booksurr wrote: »

the MP "thing" relates to Capital Gains Tax not council tax

...but mostly to their expenses.