Rebecca Evans MS, Minister for Finance and Local Government.
The Valuation Office Agency (VOA) is responsible compiling and maintaining the council tax and rating lists for Wales. Based on the available evidence, the VOA determines if a property is classed as domestic and liable for council tax, or as non domestic and liable for non domestic rates. The process for listing properties is supported by extensive legislation and guidance. The VOA is independent of the Welsh Government.
Both the VOA and local councils have a role in ensuring the information used for calculating liability for council tax and non domestic rates is accurate and up to date so owners and occupants are charged the correct amount of local tax.
The classification of properties for local tax purposes is governed by Section 66 of the Local Government Finance Act 1988. The starting point for the classification of property is whether the property is domestic. Most property used as living accommodation is defined as domestic and falls within the council tax system. Other property (including property used for business, public, infrastructure and not-for-profit purposes) is classed as non-domestic and falls within the non-domestic rating system. The legislation also sets out certain exemptions from local taxes.
The definitions hinge on the use of the property, not the physical characteristics of the property or the purpose for which it was originally built.
A property is classified as domestic if it is used as living accommodation. As well as traditional houses and flats, other types of property used as living accommodation – for example, chalets, caravans, houseboats, park homes and lodges – are subject to the council tax system.
Where a chalet is classified by the VOA as a domestic property, it will be liable for council tax unless it is eligible for a specific exemption.
Specific arrangements apply to properties providing living accommodation which are let as self-catering accommodation. A property used to provide living accommodation will be classified as non-domestic, for local tax purposes, only if it is let commercially for short periods as self-catering accommodation and meets the criteria set out in legislation (including being available to let for at least 252 days and actually let for 182 days in a 12-month period).
Chalets (and other properties) which meet the criteria are listed for non-domestic rates while those which do not meet the criteria are listed for council tax.
If a domestic property is not the primary residence of the owner, it may also be liable for a council tax premium for second homes if the local authority has determined to apply one. There are a number of statutory exceptions to council tax premiums: these include occupied caravan pitches and dwellings subject to certain planning conditions. Dwellings which qualify for an exception cannot be charged a premium but can still be charged council tax at the standard rate.
The Welsh Government has legislated to increase the maximum premium which local authorities may charge to 300% from 1 April 2023. It is for individual authorities to decide whether to apply a premium and at what level to apply it. In making these decisions, each authority needs to assess the possible impacts on individuals, communities, and the local economy.
The Welsh Government has provided guidance for local authorities on the implementation of the council tax premiums on long-term empty homes and second homes.
For further information please select the following link Written Statement: Update on Local Taxation (7 June 2023) | GOV.WALES