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Exclusive: Second Home Owners ‘Flip’ Properties To Become 'commercial' Premises To Avoid Rates

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Owners of second home have saved millions of pounds by taking advantage of the Government’s decision to relax rules on business rates.

Thousands of homes have been “flipped” to become “commercial” premises, meaning they no longer have to pay council tax on their properties.

The owners have reclassified them as holiday homes, meaning they need only pay business rates if the rental income is high enough. Businesses with rental values below £6,000 a year can avoid paying any tax whatsoever.

Analysis of the data shows 2,373 homes were flipped in the past five years – having previously been domestic homes.

An example is The Old Guildhall in Beccles, Suffolk, which was sold in July 2013 for £650,000. In November 2013, it was “flipped” and assessed as having an annual rental value of just £6,000, paying no rates at all as a result. Yet the property website Zoopla projects that the value of this house has soared by a staggering £52,000 in the last year alone, and estimates that this house could potentially rent for more than £3,000 per month.

A further 441 homes have also been “flipped”, now paying less in business rates than the average council tax bill of £1,468 by receiving tapered rate relief.

Paul Turner-Mitchell, a business rates expert who un- earthed the details, said: “With the average household struggling to meet their council tax demand despite a series of freezes, most people will view this as a tax avoidance scheme for the rich lucky enough to own a second home.”

I do hope everyone is having that nice warm fuzzy feeling today.

I wonder how many of these homes get "rented" out.

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