Holiday let tax changes 'could wipe out tourism in Wales'

Changes to council tax rules are like a "disease" that risk "wiping out tourism in Wales", an industry body has claimed.

As of 2023, owners of holiday lets must let properties for 182 days a year to qualify for cheaper business rates.

But the measures, which were introduced in a bid to improve locals' access to properties in holiday hotspots, are often unachievable and forcing owners to sell up, the Professional Association of Self Caterers (PASC) said.

The Welsh government, which previously announced plans for "small changes" to the rules, said it recognised the "strength of feeling" but added 60% of self-catering businesses had met the target.

Prior to the changes, properties made available for let at least 140 days of the year - and actually let for 70 - qualified for lower business rates rather than council tax.

That system still operates in England. However, changes in Wales mean 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 also means paying an additional premium. In Gwynedd, for example, second-home owners pay the standard council tax rate, plus an additional 150%.

Nicky Williamson, of PASC for Wales, described the 182 figure as a "disease".

"It has the potential of wiping out tourism in Wales. It is decimating some of our sector and what we continue to do is not recognise that 182 is the problem.

"We're not tackling the root cause of the issue, we're tinkering around with symptoms, we're playing with sticky plasters, and if we don't address the issue - that 182 is too high - it will continue to have a detrimental impact on tourism, possibly to the point of no return."

Gwyndaf Pritchard, who runs two holiday lets in Dwygyfylchi, Conwy, said that while some owners failed to meet the 182-day threshold, others only achieved it by reducing nightly rates and profit.

He added: "I was out of my business for six weeks [with] stress-related illnesses because of trying to achieve the 182 nights.

"There is no give in it. You're constantly on the phone looking for that next booking, looking at spreadsheets, trying to achieve the 182 nights.

"It's a 24/7 job and it just can't go on like this."

Already paying a premium on top of council tax, Pritchard said if things didn't change, he would have to look at selling the business and leaving tourism altogether.

The Welsh government announced last year it wanted to make what it described as "small changes" to the rules by April 2027.

These include allowing people to average 182 days per annum, spread over three years.

People who missed 182 by a "narrow margin" one year would escape high premiums as long as the average over the three years was 182 days or higher.

Businesses would be allowed to give away 14 days per year to charity and those days would count as being let.

The government said it also wanted local authorities to "support self-catering operators" who did not meet the 182-day target by allowing them to pay the standard rate of council tax for a year before higher premiums kicked in.

But PASC said giving away 14 nights for free was not viable for many operators, while averaging 182 days across three years would be like having "a gun against your head for year two and year three" if operators failed to meet the target in the first year.

It has called on all major parties to include a pledge to reduce the 182-day requirement in their Senedd election manifestos.

Plaid Cymru's spokesperson for housing, Sian Gwenllian MP, said the party had "always" called for a "proportionate approach" to implementing the 182-day rule, including where properties would not be eligible as full-time residences.

Welsh Conservative shadow cabinet secretary for culture, tourism and sport, Gareth Davies MS, said they would reduce the 182-day occupancy threshold to 105 days in line with the HMRC definition of self-catering accommodation.

A Reform UK Wales spokesperson said the party would get rid of the "tourist tax and the 182-day rule".

In a written statement last week, Welsh Labour finance secretary Mark Drakeford outlined his proposed changes to the rules and said he recognised the "strength of feeling" on the issue.

But he added: "Recognising that 60% of self-catering properties have already met the letting criteria, we remain of the view that, for a property to be classified as non-domestic for local tax purposes, it should be let for the majority of the year."