Local government finance circular 6/2026: council tax on second and long-term empty homes guidance

Local authorities are encouraged to communicate clearly any decision to introduce or vary a Council Tax premium under these provisions.

Authorities may wish to consider how best to provide information about any changes, including the timing of implementation and the categories of dwelling to which a premium will apply.

Clear and proportionate communication can assist households in understanding the local approach and the policy considerations underpinning it, including impact assessments. Nothing in this guidance alters existing statutory requirements in relation to the setting, billing or collection of Council Tax.

8.2 Consideration: annexes and ancillary dwellings 

Self-contained annexes may be treated as separate dwellings for Council Tax purposes, including separate banding, depending on their physical characteristics and use.

While annexes are not expressly excluded from the scope of the Council Tax variation provisions, local authorities should consider whether it is appropriate to apply a premium.

In many cases, annexes form part of, or are closely connected to, a main residence and may have a limited or negligible impact on the availability of housing within the local market. Applying a Council Tax variation to such dwellings may not advance the policy objectives of the legislation. 

Application: 

Where a dwelling includes a self-contained annexe that is ancillary to a main residence, a local authority should consider whether it is appropriate to apply a premium in light of the particular facts and circumstances.

A local authority should not apply a premium where one or more of the following circumstances are present and the annexe does not operate as a separate dwelling within the local housing market:

• the annexe is occupied by a member of the same household or by a family member connected to the main residence.
• the annexe is used for purposes ancillary to the main dwelling (for example, as accommodation for residents, dependants, carers, or for purposes connected to the primary household).
• applying a premium would not be likely to bring additional housing into effective use in the authority’s area.

Only where an annexe is genuinely functioning, or capable of functioning, as an independent dwelling withheld from effective occupation should a local authority consider whether the application of a premium would be consistent with the purpose of the legislation.

Authorities should ensure that their approach reflects the objective of the premium framework and avoids disproportionate outcomes where annexes are ancillary in nature.

8.3 Consideration: armed forces personnel stationed away from their normal residence 

Where a dwelling is left unoccupied solely because the liable person is required to live elsewhere as a result of compulsory military service, deployment, or posting, the application of a Council Tax premium will not normally advance the purpose of the legislation. The premium framework is intended to influence properties that are being withheld from effective occupation; it is not intended to penalise those who are absent due to service obligations.

Application:

A premium should not normally be applied where:

• the absence from the dwelling arises from compulsory deployment, posting, or other service-related requirements;
• the dwelling would otherwise be occupied by the liable person as their sole or main residence;
• the absence is temporary in nature and connected directly to service obligations; and
• applying a premium would not realistically influence the occupation or effective use of the dwelling.

Authorities should ensure that their approach recognises the particular circumstances of service personnel and does not result in disproportionate outcomes for those absent due to compulsory military service.

8.4 Consideration: medical professionals providing essential healthcare services

Dwellings may be empty (for example, where a person’s main residence is left empty), or occupied as a secondary residence (for example, where rented accommodation is required for work purposes), because the liable person is required to reside elsewhere in connection with their employment. This may arise where doctors and nurses occupy rented or tied accommodation associated with temporary, rotational or compulsory service.

In such cases:

• the person’s main dwelling may fall within scope of the long-term empty homes premium where it remains unoccupied for a qualifying period; and
• the rented or tied accommodation may fall within scope of the second homes premium, depending on the facts and the application of the relevant regulations.

Where a dwelling is unoccupied, or treated as a second home, solely because the liable person is required to reside elsewhere in order to deliver essential healthcare services, the application of a premium will not normally advance the purpose of the legislation. The premium is not intended to disadvantage those who are temporarily absent due to service requirements.

Application:

Where either:

• a main dwelling is unoccupied due to temporary, rotational or compulsory service-related absence; or
• a second residence arises because rented accommodation must be occupied for employment purposes,

a local authority should not apply a premium unless satisfied that doing so would be consistent with the purpose of the legislation and proportionate in the circumstances.

A premium should not normally be applied where:

• the absence or additional residence arises from employment within the NHS or other essential healthcare provision;
• the main dwelling would otherwise be occupied as the liable person’s sole or main residence;
• the arrangement is temporary, rotational, linked to training or placement, or otherwise required by service obligations; and
• applying a premium would not realistically influence the occupation or effective use of housing within the local area.

Authorities should ensure that their approach recognises the importance of maintaining essential public services and avoids disproportionate outcomes where housing arrangements arise solely from service-related requirements rather than from a decision to withhold property from effective use.

8.5 Discretionary approaches

The existing unoccupied property legislation, and the legislation pertaining to second homes, which has effect from 1 April 2026, is discretionary in nature.

These powers seek to allow local authorities to make decisions about the Council Tax treatment of second and empty homes to determine the balance in the use of housing to meet local needs.

These decisions are for local authorities to make based on the market conditions within their own local area, and the individual circumstances of the occupant.

It is for local authorities to determine their policy approach in relation to second homes and the use of discretionary powers. This is in line with the existing arrangements for long-term empty homes.

Instead of applying a premium, local authorities may also decide to vary that rate, including increasing or reducing the premium, applying no premium, or applying a discount, and to apply different approaches for different cases, classes of dwelling or areas.

Local authorities can vary the discount/increase, subject to the limits in the Regulations and exemptions, taking account of the area the home is in, the circumstances of individual owners, and/or other circumstances as a local authority considers appropriate.

Examples of where local authorities may find it beneficial to consider whether to apply discretion could include:

• Social or community benefit (in some circumstances, properties may be unoccupied or used as a secondary residence because the liable person is required to reside elsewhere on a temporary basis in order to deliver wider social, community or public benefit).
• local economy impact (e.g. temporary occupation of a property for the purposes of completing constructions works, where that property does not fall within the definition of a Job-Related Dwelling).
• hardship impact (e.g. the occupier would be subject to demonstrable hardship).

Local authorities are best placed to assess the full facts and circumstances of individual cases.

8.6 Second homes

The discretionary nature of the new additional powers mean that local authorities will be able to make decisions in relation to the treatment of second home based on local considerations, including how to achieve the right balance in the use of housing to meet local needs and to support thriving communities.

Local authorities must retain a 50% discount for second homes and empty homes that meet the following descriptions:

• Purpose-built holiday homes – these are chalets or other types of holiday property which are either unsuitable to be occupied all year round (their construction may mean they are only suitable to be lived in during the warmer months) or are not allowed to be lived in all year due to planning, licensing or other restrictions.
• Job-related dwellings - is a home that someone lives in because of their job, rather than purely by personal choice - this usually means the employer provides the accommodation.

Please see Schedule 1 -The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 (legislation.gov.uk) which provides the legal definition of Classes of unoccupied dwellings subject to 50% Council Tax discount.

8.7 Long-term empty homes