Lizzie and Philip Harvey have maintained a longstanding family connection to their holiday home near Mevagissey, Cornwall. The property, originally built by Lizzie’s grandmother and passed down through generations, serves primarily as a sentimental retreat rather than a significant source of income. While they do rent it to holidaymakers, the Harveys emphasize their role in supporting the local community, having employed the same village workers for cleaning and maintenance for 25 years. They also visit several times annually to see relatives residing nearby.
Despite the property being let out, the Harveys say they do not profit from it. Philip Harvey, a senior partner at Property Vision, a buying agency advising clients across Cornwall and Devon, explained that rental income barely covers operational costs, and increasing rents would risk pricing their property out of the local market. He added that capital values for holiday homes in the region have stagnated or declined, further complicating any decision to sell.
Concerns have grown among holiday home owners following speculation ahead of the UK government’s upcoming budget, led by Chancellor John Healey. Reports suggest the possibility of new tax measures targeting holiday cottages, including proposals to reclassify all self-catered accommodation as second homes. This would transfer tax obligations from business rates to council tax, often a more costly levy in popular tourist areas.
Currently, many English councils charge a premium on second homes, sometimes doubling the council tax bill. In parts of Wales and Scotland, second-home premiums can reach four times the standard rate. This system has prompted some owners to register their properties as businesses to retain eligibility for business rates, which are generally lower than council tax rates for comparable properties. Under current rules, holiday lets with a rateable value up to £12,000 are exempt from business rates, with discounts applying up to £15,000.
The Harveys pay business rates on their Cornwall property, which requires them to arrange private waste collection services. Lizzie Harvey expressed uncertainty about potential changes, questioning whether reverting to council tax classifications would restore access to local amenities like public bin collections.
The Professional Association of Self-Caterers UK (PASC UK), representing the sector, has highlighted the impact of more than 20 new taxes or regulations introduced in the past four years. These changes have reportedly encouraged some British holidaymakers to choose destinations abroad, such as France or Spain, where holiday costs are generally lower.
Recent tax law revisions, effective from April 2023, tightened eligibility criteria for business rates relief. In England and Scotland, holiday homes must be available to rent for at least 140 days annually and let commercially for at least 70 days to qualify. Wales imposes even stricter thresholds. As a result, between 2023 and 2025, government data shows that 34,170 self-catering properties were removed from business rates listings and reassigned to council tax rolls after failing to meet rental requirements.
In response to parliamentary inquiries, Treasury junior minister James Murray acknowledged ongoing concerns about second-home owners potentially avoiding taxes and stated that the Treasury is reviewing the tax treatment of short-term lets, including self-catering accommodation. No further details have been disclosed.
Industry representatives warn that a shift from business rates to council tax could increase annual expenses for holiday home owners by £1,000 to £3,000, a significant burden given average profits of approximately £5,000. Alistair Handyside, chairman of PASC UK, cautioned that tighter taxation might prompt more owners to sell their properties, potentially harming local tourism and hospitality sectors. He criticized the government approach, saying, “The chancellor sees us holiday-home owners as cash cows.”