Councils across Wales are calling on ministers to change advice so second-home owners who pay business rates rather than council tax cannot claim from grants intended to help small businesses survive the COVID-19 crisis by using a ‘loophole’.

Firms employing fewer than nine people can apply for £10,000 grants as part of a £1.1bn Welsh Government package set out during the pandemic.

With properties that are used as full-time holiday accommodation often registered as businesses, a rising number of second-home owners have moved from paying council tax - (which includes a second-home premium) to paying business rates.

In Wales, a second-home owner can register to pay business rates if the property is available to be let for at least 140 days a year and is actually let for a minimum of 70 days.

And after making the transition, they may be eligible for a discount from the Welsh Government, including a 100 per cent discount if the rateable value is less than £6,000.

Five councils Pembrokeshire, Ceredigion, Gwynedd, Ynys Mon and Conwy, have stated that millions could be paid to people who have designated a second home a business in order to avoid paying council tax.

Pembrokeshire county councillor Michael Williams who represents Tenby’s North ward has called on the Welsh Government to act, stating that allowing these owners to ‘exploit’ this relief would be ‘morally reprehensible’.

“I have spoken to Helen Mary Jones AM, and the leaders of Pembrokeshire and Gwynedd County Councils on this issue, and everyone that I have spoken to are extremely unhappy that due to an initial ‘loophole’ that has been exploited by some second home owners, there now appears to be possibly something of a bonanza available for them if they follow this route!” stated Clr. Williams.

“I am aware that in recent meetings with Welsh Government Ministers - great concern has been conveyed, and my understanding is that the Minister is looking at the matter. To compensate these individual so called businesses would be morally reprehensible.

“We see in the area homes being snapped up for over £850k particularly in Tenby and used for a few weeks a year, offering little financial return to genuine local business and making a handsome return due to this loophole.

“Do they now expect local taxpayers to give them a handout? This must not be allowed to happen when we have local companies and individuals struggling to survive.

“I find it sad that the Welsh Government have failed to close this legal loophole despite numerous requests to do so. It should be addressed urgently when the current emergency is over,” he continued.

Clr. Williams has approached PCC’s cabinet member for finance Clr. Bob Kilmister to received assurances that second home owners that have exploited this ‘loophole’ by transferring their properties out of council tax to business rates, will not qualify for or be paid small business rate relief, or any other related benefit, during this Covid 19 outbreak.Commenting on the matter Gwynedd Council leader Clr. Dyfrig Siencyn said that it is ‘unethical that wealthy individuals’ who own second homes have access to this financial aid package from the government.“It goes against the whole ethos of the support aid, a package to ensure a viable economy in an uneconomic period due to this disease outbreak that is spreading through the country,” he remarked.“This grant should assist small rural businesses that have been directly affected by government laws that prevent companies and businesses from trading,” he continued, stating that he has asked hiw own Council’s legal department to look at a specific clause within the business guidelines, so that it differentiates between a legitimate rural business and second home owners.