The Second Home Council Tax 'Loophole', Explained

England: the 100% second-home premium

The power behind England's premium sits in the Levelling-up and Regeneration Act 2023. It inserted a new council tax power for “dwellings occupied periodically” — the technical name for what most people call a second home for council tax purposes — where “there is no resident of the dwelling, and the dwelling is substantially furnished.” The Act lets a council increase the bill by “such percentage of not more than 100 as it may specify,” and a determination “may not relate to a financial year beginning before 1 April 2024.” In practice, most councils gave the required advance notice and started charging from 1 April 2025 rather than 2024/25. In plain terms: a council can now charge up to 2 times the normal Council Tax bill on a qualifying second home — the standard charge plus a premium of up to 100% on top, at each council's own discretion, not automatically everywhere.

Exemptions from the premium

gov.uk's own summary lists temporary exemptions, each running up to 12 months: a property that has recently gone through probate (or letters of administration), a property actively being marketed for sale or for let, and annexes or properties tied to armed forces accommodation are also carved out. The empty-homes premium is a separate, harsher scale — up to 4 times the normal bill once a home has stood empty 10 years or more — which we cover with the full band-by-duration detail on our second-home premium tracker.

The route that still avoids council tax: genuine holiday letting

This is where “loophole” talk usually comes from, and it's worth being precise about what changed. A self-catering property that meets the criteria is rated for business rates instead of council tax — and because most small self-catering businesses qualify for Small Business Rate Relief, the practical result can be a business rates bill of £0. Before April 2023, a property owner only had to declare an intention to let commercially to get onto business rates; no evidence of actual bookings was required, which is the closed loophole people remember. gov.uk's current rule, in force from 1 April 2023, is a three-part test that must all be true: the property “was available to let commercially (with the intention of making a profit) for 140 nights within a 12 month period,” it “was actually let commercially for 70 nights within the same 12 month period,” and you intend to make it available for at least 140 nights in the following 12 months too. A property that fails this test sits back on the council tax list, second-home premium and all, until it passes it.

Wales: up to 300%

Wales went further than England. The Welsh Government confirmed: “The maximum level at which local authorities can set council tax premiums on second homes and long-term empty properties will be increased to 300%, which will be effective from April 2023” — up from a previous 100% cap. That means a Welsh council can, at its own discretion, charge up to 4 times the standard bill on a qualifying second home (the standard charge plus a premium of up to 300%). Wales also raised its own self-catering business-rates test at the same time, to 252 nights available and 182 nights actually let in 12 months — a materially tougher bar than the 140/70 test that still applies in England.

Scotland: the cap was removed entirely from April 2026

Scotland moved last, and moved further. mygov.scot states plainly: “Until 1 April 2026, premiums were limited to double the usual Council Tax rate. This limit no longer applies, meaning premiums can be higher. The premium amount is decided by individual councils.” There is now no statutory ceiling on a Scottish council's second-home or long-term-empty premium at all — each council sets, and publishes, its own rate, so the same second home can face very different bills either side of the border, and even between neighbouring Scottish councils.

What's a genuine loophole today, and what isn't

Nothing above lets a second home avoid council tax by accident. The only lawful route out of council tax and its premium is the business-rates self-catering route, and it now requires proof of 70 actual let nights a year, not just a declared intention — that's a real, ongoing letting business, not a paperwork exercise. Buying in a company, or transferring ownership within a family, doesn't remove a property from the second-home premium either, because the premium is about occupation status (furnished, no resident), not ownership structure. The honest framing is: the loophole that used to exist — declare intent, pay nothing — was closed in April 2023; what's left is a genuinely different tax base (business rates instead of council tax) for a genuinely different use of the property (an actual holiday letting business).

legislation.gov.uk: Levelling-up and Regeneration Act 2023, Part 2 Chapter 2 · gov.uk: Council Tax — second homes and empty properties · gov.uk: business rates for a self-catering property in England · gov.wales: new tax rules for second homes · mygov.scot: Council Tax for empty homes and second homes, all read verbatim 11 Sep 2026.