Holiday rental proprietors in Wales may find some relief from severe tax regulations.

Welsh Government Proposes Flexible Tax Rules for Self-Catering Holiday Rentals

The Welsh government has announced plans to provide more flexibility for property owners in the self-catering holiday rental industry in Wales. The proposals aim to address the concerns of stakeholders in the industry, as expressed by the Professional Association of Self-Caterers (PASC).

The Welsh government's goal is to ensure a balance between communities, businesses, landscapes, and visitors, while acknowledging the important contribution of tourism to the Welsh economy. One of the key changes is easing the 182-day rental minimum rule, allowing property owners to reach this threshold over several years if needed.

The consultation document proposing these changes was published on 28 August 2025. It includes a "12-month grace period" for property owners before they may have to pay higher council tax rates when moving from non-domestic to domestic classification. This is in response to council tax changes introduced in 2023, which made it 80% more difficult for holiday accommodation owners to qualify for lower business tax rates.

Up to 14 days of free holidays donated to charity can now count towards the 182-day rental target in Wales. If rental properties are not available for 252 days per year and not rented for at least 182 days, owners in Wales must pay taxes meant for second homes. However, the Welsh government states that 60% of holiday rental properties in Wales are already meeting the new letting criteria.

The tax rule change in Wales was intended to alleviate a local housing crisis and gain control over the holiday let sector. However, the rule change has received criticism, with some rental property owners abandoning their businesses and facing tens of thousands of pounds in backdated tax bills.

The Welsh government works closely with tourism and hospitality businesses to help address the challenges they face. The consultation on the proposed changes is open to public responses until 20 November 2025. The government encourages everyone to make a fair contribution towards local economies and funding public services.

The new proposals from the Welsh government are intended to provide more flexibility for property owners in the self-catering holiday rental industry in Wales, addressing the concerns of stakeholders in the industry. The Professional Association of Self-Caterers (PASC) has expressed its support for the changes, recognising the need for a balanced approach that supports both the tourism industry and local communities.

Holiday rental proprietors in Wales may find some relief from severe tax regulations.