How to Avoid the 100% Council Tax Premium on Second Homes in England

What’s Happening With Second Home Council Tax From April 2025?

From April 2025, local authorities in England will have the power to apply a 100% council tax premium on second homes that are furnished but not used as a main residence.

This means some second homeowners could face paying double council tax on a property that is classed as a second home.

The change comes from the Levelling Up and Regeneration Act 2023, which gives councils greater powers to address empty properties and increase the supply of available housing in areas affected by high numbers of second homes.

For property owners, this could significantly increase annual council tax bills and create a larger tax burden on properties that are not generating regular income.

However, there may be a solution for owners who are willing to operate their property as a genuine short-term letting business.

By converting a second home into a qualifying furnished holiday let or self-catering accommodation, some properties may become eligible for business rates instead of council tax.

Here’s how it works.

What Is Council Tax?

Council tax is a local charge paid on residential properties in England and helps fund local services provided by local authorities, including:

• Waste collection
• Police services
• Fire services
• Schools
• Road maintenance
• Community services

How much council tax you pay depends on your property’s council tax band, which is determined by the property value and assessed by the Valuation Office Agency (VOA).

The amount you pay also depends on the standard council tax rate set by your local council. Policies regarding council tax can vary significantly by local authority.

For most homes, the person living in the property is responsible for the council tax payment. However, for second homes, empty properties, and some furnished properties, the owner may become responsible for paying the full council tax.

Job-related dwellings, such as homes provided for caretakers or members of the armed forces, may qualify for a 50% discount or even a full exemption from council tax.

Properties that are unoccupied due to the owner's death may be exempt from council tax until probate is granted, and an additional exemption may apply for up to six months after probate if the property remains vacant and is in the process of being sold.

If you believe your property is incorrectly classified as a second home, you can appeal to the Valuation Office Agency (VOA) to have your council tax band reviewed.What Is a Second Home Council Tax Premium?

A second home council tax premium is an additional charge applied to properties that:

• Are furnished
• Are not someone’s main residence
• Are not classed as a business property

From April 2025, some councils can apply a home council tax premium of up to 100%, meaning the owner may have to pay the equivalent of two standard council tax bills.

For example:

A property with a normal council tax bill of £2,000 per year could potentially become a £4,000 annual council tax liability if the full second home premium is applied.

The exact amount depends on the rules set by your local council.

How Can You Avoid Second Home Council Tax?

Council tax on second homes is primarily at the discretion of local councils. One potential option is to change how the property is used.

Instead of keeping the property as a second home, owners may be able to operate it as a genuine self-catering property or holiday let business.

Qualifying properties may move from council tax to business rates, meaning they are assessed as a business property rather than a residential property.

To qualify as a furnished holiday let for business rates purposes, the property generally needs to meet specific availability and letting conditions.

These include:

• Being available for commercial letting for at least 140 days per year
• Being actually let to paying guests for at least 70 days per year

If these requirements are met, the property may be assessed for business rates rather than council tax.

Depending on the property’s rateable value, the owner may also qualify for Small Business Rate Relief, potentially reducing the business rates payable.

Council Tax vs Business Rates: What’s the Difference?

A second home normally falls under council tax rules.

A qualifying holiday let business may instead fall under business rates rules.

The key difference:

Council Tax

Applies to:

• Main residences
• Second homes
• Some empty properties

Paid by:

• Homeowners or occupiers

Business Rates

Apply to:

• Commercial properties
• Qualifying self-catering accommodation

Paid by:

• Business property owners

Business rates are also used to fund local services, but they operate under a different system from normal council tax.

What About Empty Properties?

Empty properties can face additional charges under empty property rules.

Some councils can apply an empty homes premium to long-term empty properties, meaning owners may face additional council tax charges.

For example, properties that remain unoccupied for extended periods may attract higher premiums.

There are some exceptions, including certain situations involving:

• Major repairs
• Major repair work
• Armed forces accommodation
• Job-related dwellings
• Properties affected by specific circumstances

The rules vary depending on the local authority, so property owners should check their council’s policies.

What Happens If My Property Is My Main Residence?

The 100% second home premium does not apply to your main residence.

Your primary residence is generally the home where you live most of the time and where your personal records are based.

For council tax purposes, councils may consider evidence such as:

• Electoral registration
• Utility bills
• Banking records
• Insurance details

If you own multiple homes, it is important that your records accurately reflect your genuine main home.

Declaring a second home as a primary residence when it is not can result in fraud charges and penalties.

Can a Holiday Let Help Avoid the Second Home Premium?

For some second homeowners, converting a property into a properly managed holiday let can provide a solution.

If a property is registered as a holiday let and meets the required criteria, it may be assessed for business rates instead of council tax, potentially reducing the overall tax burden.

A successful holiday let can:

• Reduce exposure to second home council tax premiums
• Generate rental income
• Turn an unused property into an income-producing asset
• Support tourism and local economies

However, owners must follow council tax rules, business rates requirements, planning restrictions, and local regulations.

Simply advertising a property as a holiday let does not automatically remove tax liability — the property must meet the relevant criteria.

In Wales, a property must be available to let for at least 252 days and actually let for at least 182 days in the last 12 months to qualify as a holiday let for business rates.

In Scotland, second home owners may face a council tax premium of up to 500% depending on how long they have owned the property, with significant increases implemented in 2026.

Why Work With a Professional Short-Term Let Manager?

Managing a compliant short-term rental requires more than listing a property online.

Owners need to consider:

• Availability requirements
• Guest bookings
• Pricing
• Cleaning
• Safety
• Local regulations
• Documentation for councils and the VOA

This is where Pass the Keys can help.

We support property owners across the UK in transforming second homes into professionally managed short-term rental businesses.

What we do:

• Ensure your property is marketed consistently
• Help maximise bookings throughout the year
• Manage guest communication
• Arrange cleaning and maintenance
• Provide professional short-let management
• Help owners understand their responsibilities

Turn Your Second Home Into an Income-Producing Asset

The introduction of the second home council tax premium means many owners are reviewing how they use their properties.

Rather than allowing a second home to sit empty and attract additional council tax costs, some owners are exploring whether holiday lets and self-catering accommodation could provide a more flexible alternative.

A well-managed short-term rental can create income while allowing owners to make better use of their property.

The new council tax changes mean second homeowners need to understand their options.

While the rules vary between local authorities, qualifying as a genuine holiday let business may allow some properties to move from council tax to business rates, potentially reducing the impact of additional council tax premiums.

If you own a second property and want to understand whether short-term letting could work for you, speak to Pass the Keys today.

We help property owners unlock the value of their homes through professional short-term rental management.