The 2023 tax changes every UK holiday let landlord needs to know

We all know Brits love a staycation. Just last year, it was revealed “over half of Brits are more likely to holiday in the UK rather than travel abroad.” And Blackpool has been voted the best value staycation spot by cash strapped Brits who are flocking to the English seaside resort as the cost of living crisis continues to hit hard.  

While staycations have always been popular, British resorts have been flooded with tourists in the last few years, partly due to Covid lockdown restrictions, as well as last year’s airport chaos. The growing demand for UK holidays meant many landlords were turning to holiday lets, especially in scenic areas.  

In fact, the boom in staycations saw holiday lets increase by as much as 40% in some areas! 

But as we head into a new financial year, it’s essential holiday landlords are aware of the upcoming tax changes for 2023-24.  

The government is tightening up a few tax loopholes which could impact the profitability of your holiday let this year.  

To add to the complications, different rules are in place across the four nations.  

England 

From April 2023, property owners must prove their holiday lets are being rented out for a minimum of 70 days a year to qualify for business rates.  

Failure to do so could mean you pay higher rates of council tax on all empty and second homes from 2024.  

Scotland 

The Scottish authorities are concerned about the growing number of Air BnB type properties in concentrated areas. In October 2022, they implemented a licencing scheme for short term holiday lets in specific areas. The licences need to be granted from local councils, and you have until 01 October 2023 to apply for your licence.  

If you are an existing holiday let landlord, you can continue renting out your property while the application is being considered. It can take up to 12 months for your licence to be granted. 

If you are new to holiday lets, you cannot operate until your licence has been granted (which can take up to 9 months). If you rent out your property before your licence has been granted you could risk a £2,500 fine and be banned from applying for a licence for one year.  

Wales 

The Welsh government are making strict rules to ensure properties are occupied all year round. From April 2023, the criteria for self-catering accommodation being liable for business rates instead of council tax has changed. Properties must be available to let for at least 252 days per year, with occupancy for at least 182 days in any 12 month calendar period.  

Those properties that do not meet these thresholds may be liable to pay significantly higher rates of council tax, which are set by individual local authorities.  

Northern Ireland 

All tourist accommodation must have a valid certificate issued by the Northern Ireland Tourist Board (NITB) 

All is not lost

There is plenty of anticipated growth in the holiday let market 

These changes may cause alarm for holiday rental landlords, as the increasing occupancy rates and licencing restrictions could impact your profitability. What’s more, rules surrounding capital gains tax and stamp duty were also heavily discussed in the Chancellor’s Autumn Budget, creating a perfect storm for landlords. 

But there are clear signs our general love of UK holidays and short breaks are not slowing down.  

There is still plenty of opportunities for holiday lettings across the UK, with towns like Wrexham and Morecombe flourishing. To counteract the upcoming tax changes, your business plan should focus on how you plan to attract new tourists to maintain or increase your occupancy rates.  

At the Expat Mortgage Expert, our experienced mortgage brokers proactively work with holiday let landlords to make sure you have the right holiday let UK mortgage deal in place. When budgets are tight, and expectations are increased, having the right mortgage deal could be vital to your bottom line. 

Our access to expat holiday let mortgages across the whole market, from high street to niche lenders means we can secure you an affordable mortgage deal you might not find anywhere else.  

If you’re worried about your existing holiday let mortgage, or you’re looking at investing in a potential holiday let, why not book a local appointment with our mortgage expert? 

Call or WhatsApp: 058 513 9728 or complete an enquiry form. We can check whether you are on the right deal for you.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE