Almost 800 second and holiday-home owners in Gwynedd have exploited a legal loophole to avoid paying council tax, new figures have revealed.

The county contains more second homes than any other in Wales, and the local authority implemented a 50 per cent levy on their owners since April 2018, in a bid to dampen their popularity.

According to officers, the scheme has brought in significant additional income to the authority’s coffers at a time when block grants are continuing to dwindle.

But a report presented to the Cabinet this week has confirmed that over the past three years, 768 home owners have exploited a loophole by registering their properties as businesses – which means they can potentially avoid paying anything to the council. Any holiday homes registered as businesses should theoretically pay business rates, but do not have to pay council tax as long as long as their holiday home is available to let for 140 days a year.

With many also eligible for small business rate relief, some end up not paying any tax on them at all.

The report presented to Cabinet members noted that, while income from the council tax premium was likely to exceed original expectations, it would likely have been much more if the mechanism to transfer to non-domestic rates did not exist.

“To date this year, the Valuation Office has already allowed 287 properties to transfer from the Council Tax list to Non Domestic Rates (282 for a full year in 2017/18, 199 in 2016/17) with the impact of applications being backdated, leading to further income loss,” the report stated.

“Furthermore, the tax income would have been higher. We will continue to draw the attention of the Welsh Government and the Valuation Office to this unsatisfactory situation,” the report added.

Although the authority has not revealed the exact number of second or holiday homes in the county, figures released by Stats Wales last year showed there were 5,626 second homes in Gwynedd – more than double the number in Pembrokeshire (2,801) and dwarfing the figures for Conwy (1,473) and Anglesey (1,471).

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