Council tax could double on second homes in Scotland

Owners of second homes in Scotland could pay double the full rate of council tax, under new plans announced today.

The proposal, unveiled by the Scottish First Minister Humza Yousaf at the Scottish Trades Union Congress, would give local authorities the power to double council tax rates for second homes from April 2024.

The changes will impact thousands of people who own more than one property in Scotland, and the news comes just weeks after most councils increased bills by at least 5% for 2023-24.

Here, Which? takes a closer look at what the plans mean for Scottish homeowners, with advice on what you can do to reduce your council tax bills.

Council tax hike for second homes

Local authorities in Scotland would be allowed to increase council tax on second homes by up to double the full rate from the next financial year, according to proposals included in a joint government and Convention of Scottish Local Authorities (Cosla) consultation launched today.

Councils are already allowed to charge extra tax on long-term empty properties and the plan is to extend these powers to include properties such as holiday homes – even if they are in regular use by owners. Government statistics show there were almost 70,000 second homes and empty properties in Scotland in 2022. 

The 12-week consultation will also ask people whether rates on second and empty properties could be raised by more than double beyond next year, as well as seeking views on changes to the definition of when a property offering self-catered accommodation becomes liable for non-domestic business rates. Currently, this happens if it is let for a total of 70 nights and is available to let for 140 nights in a financial year.

The plans are part of the Scottish government's drive to increase the amount of affordable homes. The First Minister said: 'By recognising the important role councils have in considering local needs, these proposals aim to strike a balance between good housing supply and helping communities to thrive and benefit from tourism.

'I encourage anyone who is interested to respond to the consultation as we try to prioritise homes for living in, seeking a fair contribution to local services from everyone and recognising the benefits to local economies from self-catering accommodation and second homes.'

He added that all responses will be 'carefully considered' before legislation is introduced to the Scottish Parliament. A date for that has yet to be announced.

• Find out more: check your bill using our 2023 council tax calculator

Council tax already rose by 5% this month

Homeowners were hit with large council tax rises in April, with data for Scotland showing that most councils will increase bills by at least 5%. 

Unlike in England and Wales, Scotland hasn't set a cap on rate increases this year. So while people living Glasgow and Edinburgh, for example, saw bills rise by 5%, rates in the Orkney Islands increased by a whopping 10%.

Council tax only generates about 13% of local government funding, with most of their cash coming from the Scottish government. But soaring inflation and the ongoing cost of living crisis has put extra pressure on councils to balance their books.

• Listen: the Which? Money podcast recently explored how to battle rising council tax bills

Can I reduce my council tax bill?

If you think the original valuation of your home might have been wrong, or there have been changes made to the property's use or size since its valuation, you can ask the council to review your current council tax band.

Remember that, while a move to a lower council tax band would see your bills get cheaper and likely get you a council tax refund for the tax you've overpaid, it's also possible to be reclassified into a higher band, which would increase your bills.

So, before you make an appeal, it's a good idea to take the following steps:  

• Check with your neighbours: if properties in your postcode or street are similar to yours, you should generally be in the same council tax band. If you know your neighbours well enough to ask, it's worth seeing how much council tax they pay, to find out whether they're in a different band to you.
• Find out your property's value: council tax bands are based on what the value of the property would have been in April 1991 if it's in England and Scotland, or April 2003 in Wales. To challenge your council tax band, you'll need to know what the property's value would have been on that date. Look at property websites such as Rightmove and Zoopla to give you a general idea of your home's current value, then use with the Nationwide House Price calculator to get a valuation for the relevant year.

Make a challenge 

If you still think your property is in the wrong council tax band after taking the steps above, it could be worth making a challenge. You can do that either by going directly to the VOA in England and Wales, or the Scottish Assessors Association (SAA), and asking for a band review, or by writing to your local council, explaining why you think the band should be changed. 

If your claim is rejected, you can appeal to the Valuation Tribunal to request a review. It will either tell your council to amend your bill, or reject your appeal.

• Find out more: how to get a council tax refund