Eligibility for the Small Business Bonus Scheme (SBBS)
161. The consultation paper noted that self-catering properties are in some circumstances liable for non-domestic rates; with over 86% of self-catering properties benefitting from Small Business Bonus Scheme (SBBS). Properties with individual rateable values of no more than £15,000 are eligible for 100% relief and 25% relief if the rateable value is between £15,001 and £18,000.
162. Question 14 then asked,
Q14: 'Do you have any comments on the eligibility of self-catering accommodation for the Small Business Bonus Scheme?'
163. A total of 477 respondents commented at this question. The following table provides a breakdown of those who chose to respond.
Table 18: Q14
|Host with 1 property||102|
|Host with 2+ properties||70|
|Hotel / B&B owner||8|
|Other (non short-term let) landlord||7|
164. The main comment, as cited by a large minority of respondents, was that there should be no tax breaks or exemptions. Some of these respondents referred specifically to owners of short-term lets, some referred to owners of self-catering properties and some did not specify to whom this should apply. Reasons given for this included that guests will be using local public services that should be paid for or that there should be no financial incentive to remove houses from the housing market to be used for short-term letting. There was more support for accommodation to lose entitlement to the SBBS from affected residents, community organisations and other landlords than from hosts. Allied to this point, a few respondents also commented that owners should be paying some form of tax; either council tax or income tax, so as to contribute to the services used by their guests (supported by higher numbers of community organisations, guests, host intermediaries and hotels / B&Bs). One organisation referred to the ongoing review of SBBS and commented,
"The ongoing review of SBBS should consider whether the availability of SBBS for these types of premises is having the unintended consequence of encouraging property owners to construct arrangements with occupiers designed to take advantage of valuation regulations to avoid the payment of local taxes. If this is demonstrated consideration should be given as to whether this should be the intention or consequence of SBBS scheme."
165. Conversely, a small minority of respondents felt the current status quo should be maintained. Reasons for this included that guests contribute to the local economy, that small businesses should receive support or that SBBS can help to keep some small businesses viable. This was supported mostly by hosts and other businesses. A small number of these respondents who were owners of short-term lets commented that they rely on business relief to maintain viability of their business.
166. A few respondents suggested that if a short-term let is being run as a business, then it should be treated the same way as any other business; this was supported most by local authorities and community groups. A smaller number of respondents commented that local authorities need to have income to maintain services and an infrastructure that can support tourism (this was supported most by local authorities).
167. Other comments made by very small numbers of respondents included:
- Short-term lets should not be eligible for SBBS in city centres, with some specific reference to Edinburgh.
- Suggestions for a reduction in the rateable value of properties so that more valuable properties do not receive any tax relief; or for a cap on the amount of SBBS relief available.
- Individuals should not be allowed to remove properties from the housing market to become self-catering properties or short-term lets or that these types of accommodation should not be encouraged at the expense of the housing market and there should be a tax system that disincentivises homes being removed from the residential supply. One organisation commented:
"The practical impact of the current eligibility for self-catering accommodation for the Small Business Bonus Scheme is to create a system which incentivises the small-scale hosts letting 1-2 units on a short-term lets basis, who have no liability for either council tax or non-domestic rates. This comes at the expense of larger commercial operators and the private rental sector landlords. Larger commercial operators with multiple units under the same ownership will be subject to both non-domestic rates and VAT on their revenue while private rental sector landlords and their tenants remain liable for council tax. This creates a system which drives some less suitable properties into the short-term lets market, which would otherwise be maintained as a PRT [Private Rental] providing long-term homes."
- SBBS should only be allowed on the first property rented out and not on any subsequent properties.
168. Once again, there were also a small number of references to the need for a licensing regime or for registration, with effective enforcement.
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