Latest news with #counciltax
Daily Mail
2 days ago
- Business
- Daily Mail
The double council tax loophole that will cost councils £334million - as locals in second home hotspots 'pay the price'
Second home owners dodging the double council tax bill is set to cost local authorities £334million. Since April 1, local authorities have been able to charge a 100 per cent premium on second homes under new powers introduced in the 2023 Levelling Up and Regeneration Act. In Wales, they can charge premiums of up to 300 per cent. However, crafty property barons found a loophole which allows them to dodge paying their taxes by classifying their second homes as holiday lets and renting them out for 70 nights of the year. The tax dodging move means the properties qualify for business rates relief and also makes owners exempt from paying any council tax at all. In the past year, the sum of lost council tax revenue has doubled from £170m, according to research by property firm Colliers. Now, politicians and experts say the soaring figures prove the 100 per cent premium tax raid is doing more harm than good. Shadow housing minister Kevin Hollinrake critiscied the Government for their backfiring tax raid. 'Labour couldn't even be bothered to carry out any impact assessment, nor have they asked councils to restrict the policy to where there are localised problems in the housing market,' he said. John Webber, of Colliers, said it's 'making the situation even worse' and pointed out that 'less money will be collected locally' which will result in less spending on things locals actually need, such as public services or affordable housing. He added: 'The problem is not second home owners; it is politicians failing to understand the issues and having the courage to do something about it.' A whopping 230 out of 296 councils in England, and 20 out of 22 in Wales took the Government up on their offer and imposed the inflated levy. To be considered a holiday let, owners must make their property available for at least 140 nights and actually let it out to visitors for 70 nights in one year. In order to work out the business rates bill an owner pays, the council uses the property's rateable value which is based on its type, size, location and how much money they would make renting it out to holidaymakers. If they only let one property then they may qualify for small business rates relief which could see them offered up to 100 per cent relief. Properties with a rateable value of £12,001 to £15,000, will see the rate of relief go down gradually from 100 per cent to 0 per cent. For example, if the rateable value is £13,500, the owner will get 50 per cent off their bill. There are an estimated 73,838 holiday let properties that qualify for business rates relief in England and Wales. This is down from 80,000 last year thanks to tougher restrictions but Colliers expects numbers to shoot up again due to the double tax raid. Before 2023, property owners just had to declare an intention to use their home as a holiday let to meet the business rates relief qualifications.
Yahoo
3 days ago
- Business
- Yahoo
Revealed: the council that spends more on pensions than it collects in tax
Cash-strapped local authorities are spending more than half of their council tax revenue on staff pensions, a Telegraph investigation has found. The Shetland Islands council puts the equivalent of 111pc of its council tax haul into staff pensions, while councils in Hackney, South Oxfordshire, Newcastle-under-Lyme and the Orkney Islands all shell out more than half. Another 19 fork out the equivalent of at least a third of what they take in. Together, the 24 councils have stuffed almost £3bn into staff pensions over the past five years – but still hiked their tax rates by an average of over 7pc for 2025-26. As rates soar to record levels and second home owners are hit with double premiums, Telegraph Money can reveal: 12 Scottish, nine English and three Welsh local authorities now shell out more than a third of their council tax on staff pension contributions – with the total bill exceeding £730m a year. 60 councils spend at least 20pc of what they collect. The Local Government Pension Scheme already pays 2.3 million retirees and another five million current and former workers are building up generous, inflation-linked pensions. It comes after nine in 10 areas across England endured the maximum 4.99pc council tax rise last month, with parts of Scotland and Wales slapped with even higher increases. Local authority funding comes from multiple sources, including government grants, but tax receipts represented more than half of English councils' core spending power last year, according to the Institute for Fiscal Studies. The Local Government Pension Scheme for England and Wales is one of the world's largest funded schemes, with 6.7 million members and £390bn in assets. Scotland's scheme has another 639,000 and assets of £60bn. Together, they pay retirees £15bn a year in inflation-linked, guaranteed pensions for life. Employers pay an average contribution of 19.8pc of salaries for staff pension in England and Wales and 17.5pc in Scotland. Now, following a series of Freedom of Information requests, The Telegraph can reveal the true cost of the generous schemes – and how much of your council tax is used to fund them. Nigel Farage, Reform leader, said: 'For all the talk of debt, for all the talk of interest rates, for all the talk of local, county and national budgets, the real elephant in the room is public sector pensions. 'What is happening is a microcosm of an even bigger national problem. These will present big challenges for Reform in the councils we're in control of.' The Shetland Islands council reported the highest percentage of contributions paid compared to council tax collected with 111pc. Its pension costs of £74.9m over the past five years dwarfed the £67.7m it collected from ratepayers. In March, council officials said the council's major spending commitments and millions in borrowing repayments would lead to cuts to everyday services. Orkney Islands council was also near the top of the list after spending the equivalent of 58pc of council tax. The highest in England was Hackney council, which collected £415.2m in council tax between 2020 and 2024 and paid £243.3m, or 59pc, into staff pensions. It has yet to release its 2024-25 figures, but confirmed in November it would need to make savings of £67m by 2028. South Oxfordshire district council received £43.8m over the past five years, but spent £25.2m, or 58pc. Blaenau Gwent county borough council, at 39pc, was the highest in Wales after taking in £176.9m and spending £68.5m. A total of 60 local authorities have spent more than a fifth of the council tax they collected on pension contributions since 2020-21. Among the 24 that spent over a third, the average council tax increase for 2025-26 was 7.5pc. It ranged from 1.99pc in Newcastle-under-Lyme to 15pc on the Orkney Islands. Birmingham council, which effectively filed for bankruptcy and announced £300m in cuts over two years, spent more than £100m a year, equivalent to 29pc of its council tax. The figures come as homeowners and renters battle soaring council tax rates across the country. Almost half of properties in England now face bills of at least £2,000, while the number of households on the hook for a £5,000 bill has quadrupled. Six councils were also granted permission for exceptional increases by Angela Rayner, with Labour-run councils in Bradford and Newham hiking rates by 9.99pc and 8.99pc respectively. Increases in Scotland and Wales were even higher. Second home owners have also been hit after more than 200 local authorities brought in a 100pc council tax premium from April 1, enabled by rules introduced under the Conservatives. Telegraph analysis found that 2,000 second home owners in popular holiday hotspots could face bills of £10,000 or more across both their residences. The average second home owner will now see their tax bill rise 77pc to £3,672 in 2025-26. John O'Connell, of the TaxPayers' Alliance, said: 'Local taxpayers are fed up with seeing more and more of their cash being used to prop up gold-plated pensions that most could only dream of. 'Households across the country are still reeling from the latest round of council tax rises and authorities are cutting back key services. All the while, those working in local councils are sitting pretty on defined benefit nest eggs that are all but non-existent in the private sector.' Despite the amounts paid in by councils, the Local Government Pension Scheme remained almost £6bn in deficit at its last valuation. Of 87 individual schemes, 26 still didn't have enough money to pay their retirees. There were hopes that councils would be able to cut their contributions following the next round of valuations, due later this year. However, experts fear this is now less likely after Donald Trump's announcement of global tariffs hit investment markets. Andy King, of wealth manager Evelyn Partners, said the 'huge divide' between public and private sector pensions raised questions over affordability and fairness for taxpayers. He said: 'A lot of council tax payers will be surprised at just how much of their continually rising bills go towards funding pensions, rather than into local services. The scheme is hugely more generous than private sector pensions, and local government staff may not know how good it actually is.' A Local Government Association spokesman said: 'The Local Government Pension Scheme [LGPS] can help encourage people to develop a career in local government. With pay often lower in local government than comparable private sector roles, the LGPS can mitigate that while occupational pensions, like the LGPS, can help public sector workers avoid needing welfare benefits in retirement. 'The LGPS is the most robust public sector pension scheme. Compared with other major public sector pension schemes, the employer contribution rates in the LGPS are also generally much lower.' A Hackney council spokesman said: 'Council tax income is just one of many funding sources that form our £1.9bn budget this year and help us deliver over 800 services that our residents rely on.' Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
3 days ago
- Business
- Telegraph
Revealed: the council that spends more on pensions than it collects in tax
Cash-strapped local authorities are spending more than half of their council tax revenue on staff pensions, a Telegraph investigation has found. The Shetland Islands council puts the equivalent of 111pc of its council tax haul into staff pensions, while councils in Hackney, South Oxfordshire, Newcastle-under-Lyme and the Orkney Islands all shell out more than half. Another 19 fork out the equivalent of at least a third of what they take in. Together, the 24 councils have stuffed almost £3bn into staff pensions over the past five years – but still hiked their tax rates by an average of over 7pc for 2025-26. As rates soar to record levels and second home owners are hit with double premiums, Telegraph Money can reveal: 12 Scottish, nine English and three Welsh local authorities now shell out more than a third of their council tax on staff pension contributions – with the total bill exceeding £730m a year. 60 councils spend at least 20pc of what they collect. The Local Government Pension Scheme already pays 2.3 million retirees and another five million current and former workers are building up generous, inflation-linked pensions. It comes after nine in 10 areas across England endured the maximum 4.99pc council tax rise last month, with parts of Scotland and Wales slapped with even higher increases. Local authority funding comes from multiple sources, including government grants, but tax receipts represented more than half of English councils' core spending power last year, according to the Institute for Fiscal Studies. The Local Government Pension Scheme for England and Wales is one of the world's largest funded schemes, with 6.7 million members and £390bn in assets. Scotland's scheme has another 639,000 and assets of £60bn. Together, they pay retirees £15bn a year in inflation-linked, guaranteed pensions for life. Employers pay an average contribution of 19.8pc of salaries for staff pension in England and Wales and 17.5pc in Scotland. Now, following a series of Freedom of Information requests, The Telegraph can reveal the true cost of the generous schemes – and how much of your council tax is used to fund them. Nigel Farage, Reform leader, said: 'For all the talk of debt, for all the talk of interest rates, for all the talk of local, county and national budgets, the real elephant in the room is public sector pensions. 'What is happening is a microcosm of an even bigger national problem. These will present big challenges for Reform in the councils we're in control of.' The Shetland Islands council reported the highest percentage of contributions paid compared to council tax collected with 111pc. Its pension costs of £74.9m over the past five years dwarfed the £67.7m it collected from ratepayers. In March, council officials said the council's major spending commitments and millions in borrowing repayments would lead to cuts to everyday services. Orkney Islands council was also near the top of the list after spending the equivalent of 58pc of council tax. The highest in England was Hackney council, which collected £415.2m in council tax between 2020 and 2024 and paid £243.3m, or 59pc, into staff pensions. It has yet to release its 2024-25 figures, but confirmed in November it would need to make savings of £67m by 2028. South Oxfordshire district council received £43.8m over the past five years, but spent £25.2m, or 58pc. Blaenau Gwent county borough council, at 39pc, was the highest in Wales after taking in £176.9m and spending £68.5m. A total of 60 local authorities have spent more than a fifth of the council tax they collected on pension contributions since 2020-21. Among the 24 that spent over a third, the average council tax increase for 2025-26 was 7.5pc. It ranged from 1.99pc in Newcastle-under-Lyme to 15pc on the Orkney Islands. Birmingham council, which effectively filed for bankruptcy and announced £300m in cuts over two years, spent more than £100m a year, equivalent to 29pc of its council tax. The figures come as homeowners and renters battle soaring council tax rates across the country. Almost half of properties in England now face bills of at least £2,000, while the number of households on the hook for a £5,000 bill has quadrupled. Six councils were also granted permission for exceptional increases by Angela Rayner, with Labour-run councils in Bradford and Newham hiking rates by 9.99pc and 8.99pc respectively. Increases in Scotland and Wales were even higher. Second home owners have also been hit after more than 200 local authorities brought in a 100pc council tax premium from April 1, enabled by rules introduced under the Conservatives. Telegraph analysis found that 2,000 second home owners in popular holiday hotspots could face bills of £10,000 or more across both their residences. The average second home owner will now see their tax bill rise 77pc to £3,672 in 2025-26. John O'Connell, of the TaxPayers' Alliance, said: 'Local taxpayers are fed up with seeing more and more of their cash being used to prop up gold-plated pensions that most could only dream of. 'Households across the country are still reeling from the latest round of council tax rises and authorities are cutting back key services. All the while, those working in local councils are sitting pretty on defined benefit nest eggs that are all but non-existent in the private sector.' Despite the amounts paid in by councils, the Local Government Pension Scheme remained almost £6bn in deficit at its last valuation. Of 87 individual schemes, 26 still didn't have enough money to pay their retirees. There were hopes that councils would be able to cut their contributions following the next round of valuations, due later this year. However, experts fear this is now less likely after Donald Trump's announcement of global tariffs hit investment markets. Andy King, of wealth manager Evelyn Partners, said the 'huge divide' between public and private sector pensions raised questions over affordability and fairness for taxpayers. He said: 'A lot of council tax payers will be surprised at just how much of their continually rising bills go towards funding pensions, rather than into local services. The scheme is hugely more generous than private sector pensions, and local government staff may not know how good it actually is.' A Local Government Association spokesman said: 'The Local Government Pension Scheme [LGPS] can help encourage people to develop a career in local government. With pay often lower in local government than comparable private sector roles, the LGPS can mitigate that while occupational pensions, like the LGPS, can help public sector workers avoid needing welfare benefits in retirement. 'The LGPS is the most robust public sector pension scheme. Compared with other major public sector pension schemes, the employer contribution rates in the LGPS are also generally much lower.' A Hackney council spokesman said: 'Council tax income is just one of many funding sources that form our £1.9bn budget this year and help us deliver over 800 services that our residents rely on.'
Telegraph
4 days ago
- Business
- Telegraph
Councils to lose £334m as second home tax raid backfires
Second home owners dodging the double council tax raid will cost local authorities £334m, analysis shows. A loophole means owners can escape paying four-figure bills by flipping their properties into holiday lets and renting them out for 70 nights of the year. The move allows the properties to qualify for business rates relief and also exempts owners from paying any council tax at all. In the past year, the amount of lost council tax revenue has doubled from £170m, according to research by property firm Colliers. Experts and politicians said the figures proved the tax raid was backfiring. Kevin Hollinrake, the shadow housing minister, said: 'Labour couldn't even be bothered to carry out any impact assessment, nor have they asked councils to restrict the policy to where there are localised problems in the housing market. 'This policy has massively backfired on them and it will be local people who pay the price.' In Cornwall, the second home capital of the country, £52m of council tax income will be lost to 10,731 holiday let properties.
Telegraph
7 days ago
- Business
- Telegraph
Number of council tax dodgers soars to highest level since 2009
The number of households not paying their council tax has risen to 4.4 million, the highest amount in 14 years. Research by Debt Justice, a campaign group, found the figure increased by 40pc last year, from 3.2 million in 2023. It amounts to the largest number of households in council tax arrears since 2009, when the global financial crash wiped out families' savings. In total, taxpayers owed around £6bn to cash-strapped local authorities last year, up from £5.5bn the year prior. Councils are already facing a £2.3bn funding gap this year, according to the Local Government Association. Campaigners said the figures show local authorities should focus on the 'growing crisis' of tax arrears rather than increasing council tax. Nine in ten town halls increased the tax by the maximum 5pc this year, bringing the average cost of a Band D property to £2,280. And a nationwide clampdown on second home owners has left them being charged double council tax. The premium, which has been introduced by more than 200 councils, means the average bill on a second home is £3,672. Telegraph Money is campaigning for the levy to be abolished. John O'Connell, of lobby group the TaxPayers' Alliance said: 'With a record 4.4m people now in council tax debt, town hall bosses should be focusing on helping struggling households, not hammering second homeowners with punitive premiums. 'Hiking taxes on one group won't solve the growing crisis facing millions of others.' Labour councils twice more likely to chase debt Earlier this year, The Telegraph revealed that Labour councils are chasing almost twice as much unpaid council tax as Conservative-led authorities. Our analysis showed councils are already chasing £4.4bn in unpaid taxes. Of this, more than £2.5bn was owed to councils run by Labour, compared to £673m owed to Tory councils. Debt Justice highlighted that people who miss a council tax payment are generally from the poorest households. The Government is currently considering a ban on the use of bailiffs to chase arrears and will publish a consultation later this year. Andrew Dixon, of campaign group Fairer Share, said: 'I am deeply concerned by Debt Justice's recent findings. This alarming increase underscores the urgent need to reform our outdated and regressive council tax system.' Councillor Adam Hug, housing spokesman for the LGA said: 'All councils make every effort to collect the that which is owing to them and 96 per cent of council tax is collected in the year in which it is due. 'When there are instances of unpaid council tax, it is often due to complex circumstances or people already facing hardship, and local authorities seek to work with individuals to work out a payment plan and avoid them lapsing into debt.'
