Appendix 1 - Scottish Government statutory guidance
Perth and Kinross Council · 24 June 2026
Back to Finance and Resources Committee — 24 June 2026 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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1 Local government finance circular 6/2026: council tax on second and long-term empty homes guidance GUIDE FOR LOCAL AUTHORITIES TO APPLY THEIR DISCRETION TO EITHER REDUCE OR INCREASE COUNCIL TAX LIABILITY TO SECOND AND LONG-TERM EMPTY HOMES Contents 1. Introduction 2. Definitions 3. Overview of powers 4. How the income can be used 5. Ring-fenced income 6. Council tax increases 7. Exclusions from the increase 8. Discretionary powers to vary the discount/increase 9. Treatment of additional income 10. Accountancy 11. Monitoring 12. Enforcement 13. Enquiries Appendix 1
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2 1. Introduction This guidance note replaces the previous guidance - Local government finance circular 6/2024 – in relation to the Council Tax treatment of unoccupied properties (second and long-term empty homes). This note covers powers contained in the following legislation: Local Government in Scotland Act 2003, as amended by the Housing (Scotland) Act2025; and the Local Government Finance (Unoccupied Properties etc.) (Scotland) Act 2012; and related regulations: • The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 • The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2016 • The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2023 • The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Amendment Regulations 2026 • The Council Tax (Administration and Enforcement) (Scotland) Amendment Regulations 2012 • The Council Tax (Exempt Dwellings) (Scotland) Amendment Order 2012 The table below summaries legislative changes introduced through the 2013 Regulations and subsequent amending instruments. Regulations Year Description 2013 Enables local authorities to charge an empty homes council tax premium of up to 100%. 2016 Enables local authorities to remove the discount on second homes. 2023 Enables local authorities to charge a second homes council tax premium of up to 100%; and the empty homes premium can no longer be applied to homes which have been empty for at least 12 months, where the property has been purchased by a new owner within the past six months, and repairs or renovations are being undertaken to contribute to the improvement of the property 2025 From 1 April 2026, establishes a national default rate for Council Tax premiums for second homes and long-term empty homes of 100 per cent; and enables local authorities to set a rate for Council Tax
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3 premiums for second homes and long-term empty homes, above or below the national default rate. Local authorities can vary the rate of Council tax for second and long term empty homes, by increasing or reducing the premium, applying no premium, or applying a discount.
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4 2. Definitions Second and empty homes are defined as: • second homes are accommodation that is not someone’s sole or main residence but is lived in for 25 days or more in the council tax charging period and must be furnished according to the definition in the regulations. • empty homes are also accommodation that is not someone’s sole or main residence. However, the accommodation may be either furnished or unfurnished but is either not lived in at all or is lived in for less than 25 days in the council tax charging period. For the purpose of this guidance: • empty homes will mean homes that are empty for less than 12 months • long-term empty will mean homes that are empty for 12 months or more
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5 3. Overview of powers In relation to Council Tax charges for second and empty homes, the Regulations provide local authorities with the power to vary that rate, including increasing or reducing the premium, applying no premium, or applying a discount, and to apply different approaches for different cases, classes of dwelling or areas. Local authorities also have discretion to vary the council tax charged for different circumstances, and/or to apply discounts or increases in all or part of their areas, as they consider appropriate. This flexibility recognises that different pressures and factors may affect different areas. This can be done by using either postcode boundaries, council wards or data-zones. Housing Need and Demand Assessments and Local Housing Strategies (LHS) may inform development of Council Tax charging policies for second and empty homes. Local authorities may use these to consider the effect of second home ownership and empty properties in their areas, and whether increased levels of Council Tax would help to address any problems arising from these types of properties. The purpose of this guidance is to support the lawful, proportionate exercise of local authority discretion following changes to the statutory framework governing Council Tax variations for unoccupied dwellings. The amendment made by the Housing (Scotland) Act 2025 removed the pre-existing statutory upper limit on the level of variation that may be applied. This guidance is intended to set out considerations which local authorities should have due regard to as they exercise their discretionary powers. More information about factors that may inform policies and the use of discretion are set out in this guidance.
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6 4. How the income can be used Council Tax income generated from second and unoccupied homes falls into two categories: Ring-fenced revenue Income generated using existing powers to reduce the discount on long-term empty homes and second homes in the 10% to 50% bracket will continue to be ring-fenced for affordable housing and empty homes services. This should be used in accordance with section 5 of this guidance. Revenue that is not ringfenced Income received if the discount is under 10% or if a council tax premium is applied, is not ring-fenced. While it can be used as the local authority sees fit, the Scottish Government encourages authorities to use this income for housing priorities.
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7 5. Ring-fenced income This income may be used by local authorities or provided to other organisations and individuals including Registered Social Landlords (RSLs) to support revenue and capital expenditure related to a range of affordable housing and empty homes activity including (but not limited to): • providing new-build affordable housing through RSLs or new council house building • funding of specified elements of water and sewerage infrastructure for new homes • bringing empty properties back into use (into the social sector where possible) – including funding for empty homes officer posts, loans and grants for repairs, renovations, and projects that involve partnership working with others e.g. third sector organisations. • land acquisition for affordable housing development • purchasing off-the-shelf houses from private developers for affordable housing use – including the purchase of developers’ part-exchange properties 5.1 Use of income on existing Council or RSL houses The Scottish Government does not expect local authorities to use the income to pay for routine maintenance and refurbishment of existing social rented stock. This includes improvement made towards meeting the Scottish Housing Quality Standard (SHQS). Both local authorities and RSLs, as responsible landlords, should have robust programmes in place to ensure that their stock is maintained and refurbished to a high standard expected by tenants. The income could, however, be used towards a particularly innovative scheme involving existing stock. An example could be to fund a scheme, which sought to improve the energy efficiency of homes significantly beyond the SHQS. Such a scheme would contribute toward climate change targets, reduce utility bills for tenants and potentially lift some tenants out of fuel poverty. 5.2. Diligence in relation to potential projects In making decisions on the funding of organisations and individuals, local authorities will wish to assess the financial viability of projects and issues related to security of tenure and affordability. Local authorities may use the additional income to fund or support discrete projects or top up funding from other sources. In doing so they need to ensure that they are compliant with the UK’s international commitments on subsidy control. This includes the Subsidy Control Act 2022, the EU-UK Trade and Cooperation Agreement (TCA), World Trade Organisation Membership, and any commitments arising from international treaties and agreements to which the UK is a party. Note, the Subsidy Control Act 2022 is applicable from 4 January 2023.
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8 A local authority may use this income to support prudential borrowing for new council house building and any of the housing activities listed above is permitted. This could mean a local authority taking on long term commitments that it will need to be able to service even if the additional ring-fenced income reduces over time. It is for local authorities to administer this in line with the prudential code for capital finance. 5.3 Strategic Planning Local authorities should set out future plans for expenditure of the ring-fenced income in their Strategic Housing Investment Plans, which reflect the key objectives set out in their LHS. In addition, the Scottish Empty Homes Partnership have developed the Empty Homes Framework guidance and toolkit to assist local authorities in setting out detailed action plans to support delivery of an empty homes strategy. These strategies should align with LHSs and Strategic Housing Investment Plans (SHIP).
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9 6. Council Tax Increase – Second and Long-term Empty Homes Local authorities can increase or reduce the premium, applying no premium, or a discount. The discretion given to local authorities to vary the council tax premium rate is intended to be a tool to encourage efficient use of existing housing stock by: • prioritising housing for permanent occupation, whether this is in the rented sector or home ownership • enhancing the sustainability of local communities; reaching the right balance for their local circumstances between local housing needs for residents, housing for seasonal workers and accommodation for tourists • influencing ownership patterns to encourage second homeowners to use their accommodation differently, for the benefit of local communities such as from personal use to a private rental tenancy, which could help increase supply in the private rented sector • bringing long-term empty homes back into use as safe, secure and warm housing • increasing the supply of affordable housing In considering whether to charge a premium, local authorities may wish to take account of the housing need and circumstances in their areas. The following factors may be relevant: • numbers and percentages of long-term empty homes or second homes in the area • distribution of long-term empty homes or second homes and other housing throughout the area and an assessment of their impact on property values in particular areas • potential impact on local economies and the tourism industry • patterns of demand for, and availability of, affordable homes • potential impact on local public services • potential impact on the local community • other measures that are available to authorities to increase housing supply • other measures that are available to authorities to help bring empty properties back into use Local authorities may wish to consider individual unique cases and their impact on local services, local economy, and local communities. It will be for owners to prove that their property is a genuine second home and local authorities will need to decide what evidence they require to make this determination. Decisions may include evidence in the form of utility bills, TV license and anything else that a local authority deems appropriate. Visiting officers may be used to follow up on individual properties. When deciding what level of premium might apply to second and long-term empty homes, local authorities may wish to be aware of approaches adopted elsewhere to consider impacts and effectiveness. For example, in England councils may take a
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10 stepped approach, with increases over time, based on the length of time a property has been empty1. 6.1 Long-term empty homes Local authorities can increase or reduce the premium, applying no premium, or a discount. An empty home may be either furnished or unfurnished but is either not lived in at all or is lived in for less than 25 days in any twelve-month period. From 1 April 2024 local authorities can no longer apply the council tax premium to long-term empty homes which have been purchased by a new owner within the past 6 months, and repairs or renovations are being undertaken to bring the home back into use. Local authorities have discretion to extend the period where they consider that it is appropriate to do so in order to enable works to be completed. Repairs and renovations that contribute to the improvement of the property include, but are not limited to: • upgrades e.g. new kitchen and bathrooms • energy efficiency works e.g. new windows and heating systems • modernisation works e.g. new wiring and plumbing systems • general repairs e.g. roof restoration and new render • Non-structural remedial action e.g. subsidence and rising damp This should not include activity which would not prevent the occupation of the property (for example, minor decorative works e.g. repainting and wallpapering). Note, this is distinct from the existing mandatory discounts for properties undergoing major structural repair work to become habitable. 1 Guidance on the implementation of the council tax premiums on long-term empty homes and second homes - GOV.UK
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11 7. Exclusions from the increase 7.1. Existing Mandatory Discounts and Exemptions The new flexibility will not affect an owner’s eligibility to claim council tax exemptions under the Council Tax (Exempt Dwellings) (Scotland) Order 1997 (‘the 1997 Order’). Exemptions are in place for empty homes, these include where the owner is: • marketing it for sale or let • in long-term residential care • in hospital long term • in prison • defaulting on their mortgage and the home is or will be repossessed by a lender • undertaking structural repairs (for up to one year after it becomes unoccupied) • deceased (in which case the exemption is for up to 6 months after the owner’s estate has settled) As long as an owner is eligible for an exemption, they would not be charged any council tax, regardless of how long the home has been empty. However, where a home or owner is no longer eligible for the exemption, a Council Tax increase will apply after the property has been empty for 12 months or more. 7.2. Homes actively being marketed for sale or let Homes being marketed for sale or let will be exempt from the council tax increase until they have been empty for two years or more. New build properties can also qualify for this exemption from the increase. This exemption is conditional on the home being genuinely marketed for sale or let at a realistic market price. In considering whether a home is genuinely being marketed for sale or let, local authorities can have regard to any unduly restrictive conditions being attached to the sale or let as well as the sales price/ rent level. In coming to their decision on whether or not the property is being genuinely marketed for sale or let, local authorities can request and consider evidence including: • Home Report - If the property is being marketed for sale, does it have a valid home report? Most houses for sale in Scotland require a home report which also includes a valuation of the property. If the home report valuation is significantly below the advertised price, it may be that the owner is not making a genuine attempt to sell their property. • Marketing - Are the owner’s marketing efforts providing adequate exposure to the market? Is the property being actively marketed by an agent and/or property sale/letting website? This may include marketing it on the Scottish Empty Homes Partnership’s Matchmaker Portal.
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12 8. Considerations and Discretionary powers to vary the discount/increase 8.1 Consideration: Notification and transparency Local authorities are encouraged to communicate clearly any decision to introduce or vary a Council Tax premium under these provisions. Authorities may wish to consider how best to provide information about any changes, including the timing of implementation and the categories of dwelling to which a premium will apply. Clear and proportionate communication can assist households in understanding the local approach and the policy considerations underpinning it, including impact assessments. Nothing in this guidance alters existing statutory requirements in relation to the setting, billing or collection of Council Tax. 8.2 Consideration: Annexes and ancillary dwellings Self-contained annexes may be treated as separate dwellings for Council Tax purposes, including separate banding, depending on their physical characteristics and use. While annexes are not expressly excluded from the scope of the Council Tax variation provisions, local authorities should consider whether it is appropriate to apply a premium. In many cases, annexes form part of, or are closely connected to, a main residence and may have a limited or negligible impact on the availability of housing within the local market. Applying a Council Tax variation to such dwellings may not advance the policy objectives of the legislation. Application: Where a dwelling includes a self-contained annexe that is ancillary to a main residence, a local authority should consider whether it is appropriate to apply a premium in light of the particular facts and circumstances. A local authority should not apply a premium where one or more of the following circumstances are present and the annexe does not operate as a separate dwelling within the local housing market: • the annexe is occupied by a member of the same household or by a family member connected to the main residence. • the annexe is used for purposes ancillary to the main dwelling (for example, as accommodation for residents, dependants, carers, or for purposes connected to the primary household). • applying a premium would not be likely to bring additional housing into effective use in the authority’s area.
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13 Only where an annexe is genuinely functioning, or capable of functioning, as an independent dwelling withheld from effective occupation should a local authority consider whether the application of a premium would be consistent with the purpose of the legislation. Authorities should ensure that their approach reflects the objective of the premium framework and avoids disproportionate outcomes where annexes are ancillary in nature. 8.3 Consideration: Armed forces personnel stationed away from their normal residence Where a dwelling is left unoccupied solely because the liable person is required to live elsewhere as a result of compulsory military service, deployment, or posting, the application of a Council Tax premium will not normally advance the purpose of the legislation. The premium framework is intended to influence properties that are being withheld from effective occupation; it is not intended to penalise those who are absent due to service obligations. Application: A premium should not normally be applied where: • the absence from the dwelling arises from compulsory deployment, posting, or other service-related requirements; • the dwelling would otherwise be occupied by the liable person as their sole or main residence; • the absence is temporary in nature and connected directly to service obligations; and • applying a premium would not realistically influence the occupation or effective use of the dwelling. Authorities should ensure that their approach recognises the particular circumstances of service personnel and does not result in disproportionate outcomes for those absent due to compulsory military service. 8.4 Consideration: Medical professionals providing essential healthcare services Dwellings may be empty (for example, where a person’s main residence is left empty), or occupied as a secondary residence (for example, where rented accommodation is required for work purposes), because the liable person is required to reside elsewhere in connection with their employment. This may arise where doctors and nurses occupy rented or tied accommodation associated with temporary, rotational or compulsory service. In such cases: • the person’s main dwelling may fall within scope of the long-term empty homes premium where it remains unoccupied for a qualifying period; and
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14 • the rented or tied accommodation may fall within scope of the second homes premium, depending on the facts and the application of the relevant regulations. Where a dwelling is unoccupied, or treated as a second home, solely because the liable person is required to reside elsewhere in order to deliver essential healthcare services, the application of a premium will not normally advance the purpose of the legislation. The premium is not intended to disadvantage those who are temporarily absent due to service requirements. Application: Where either: • a main dwelling is unoccupied due to temporary, rotational or compulsory service-related absence; or • a second residence arises because rented accommodation must be occupied for employment purposes, a local authority should not apply a premium unless satisfied that doing so would be consistent with the purpose of the legislation and proportionate in the circumstances. A premium should not normally be applied where: • the absence or additional residence arises from employment within the NHS or other essential healthcare provision; • the main dwelling would otherwise be occupied as the liable person’s sole or main residence; • the arrangement is temporary, rotational, linked to training or placement, or otherwise required by service obligations; and • applying a premium would not realistically influence the occupation or effective use of housing within the local area. Authorities should ensure that their approach recognises the importance of maintaining essential public services and avoids disproportionate outcomes where housing arrangements arise solely from service-related requirements rather than from a decision to withhold property from effective use. 8.5 Discretionary Approaches The existing unoccupied property legislation, and the legislation pertaining to second homes, which has effect from 1 April 2026, is discretionary in nature. These powers seek to allow local authorities to make decisions about the Council Tax treatment of second and empty homes to determine the balance in the use of housing to meet local needs. These decisions are for local authorities to make based on the market conditions within their own local area, and the individual circumstances of the occupant.
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15 It is for local authorities to determine their policy approach in relation to second homes and the use of discretionary powers. This is in line with the existing arrangements for long-term empty homes. Instead of applying a premium, local authorities may also decide to vary that rate, including increasing or reducing the premium, applying no premium, or applying a discount, and to apply different approaches for different cases, classes of dwelling or areas. Local authorities can vary the discount/increase, subject to the limits in the Regulations and exemptions, taking account of the area the home is in, the circumstances of individual owners, and/or other circumstances as a local authority considers appropriate. Examples of where local authorities may find it beneficial to consider whether to apply discretion could include: • Social or community benefit (in some circumstances, properties may be unoccupied or used as a secondary residence because the liable person is required to reside elsewhere on a temporary basis in order to deliver wider social, community or public benefit). • local economy impact (e.g. temporary occupation of a property for the purposes of completing constructions works, where that property does not fall within the definition of a Job-Related Dwelling). • hardship impact (e.g. the occupier would be subject to demonstrable hardship). Local authorities are best placed to assess the full facts and circumstances of individual cases. 8.6 Second Homes The discretionary nature of the new additional powers mean that local authorities will be able to make decisions in relation to the treatment of second home based on local considerations, including how to achieve the right balance in the use of housing to meet local needs and to support thriving communities. Local authorities must retain a 50% discount for second homes and empty homes that meet the following descriptions: • Purpose-built holiday homes – these are chalets or other types of holiday property which are either unsuitable to be occupied all year round (their construction may mean they are only suitable to be lived in during the warmer months) or are not allowed to be lived in all year due to planning, licensing or other restrictions. • Job-related dwellings - is a home that someone lives in because of their job, rather than purely by personal choice - this usually means the employer provides the accommodation.
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16 Please see Schedule 1 -The Council Tax (Variation for Unoccupied Dwellings) (Scotland) Regulations 2013 (legislation.gov.uk) which provides the legal definition of Classes of unoccupied dwellings subject to 50% Council Tax discount. 8.7 Long-term empty homes Under the legislation, local authorities are prevented from using their discretion to vary council tax charges in a way that gives more favourable treatment to empty social rented homes just because they are owned by a social landlord. It is important that all owners take steps to bring homes back into use as soon as possible, rather than leaving them empty. Examples of where local authorities may find it beneficial to use their discretion in determining whether a premium should apply are: • a property that is taking a long time to sell/let in a stagnant market despite being priced appropriately • an Empty Homes Officer has assessed the owner is taking positive steps to re- occupy their property and a time-limited council tax increase “holiday” would encourage the property to be brought back into use sooner.
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17 9. Treatment of Additional Income 9.1. Effect on central Government grant The council tax base is used in calculating local authorities’ grant from the Scottish Government. As second homes and long-term empty properties are counted as half a dwelling in the calculation of the council tax base, regardless of what a local authority does with setting a discount or increase the level of central government grant is not affected as a result of local authorities reducing the level of discount or charging an increase. 9.2. Accounting for income received through reduced discounts Local authorities are required to ensure that a sum equal to the additional income, collected as a result of reducing discount between 10% and 50% for second homes and long-term empty properties is used in accordance with the broad outline as set out under section 4 above. The funds can either be transferred to an RSL, another organisation, individual or used by the local authority itself. In calculating the amount to be spent, authorities are required to consider all income received as a result of reducing the level of discount, irrespective of the year to which the income relates. Where resources are being allocated to RSLs, they will need a firm commitment regarding funding levels due to the fact that once project costs are legally committed, they cannot be withdrawn. It may be difficult for local authorities to be certain of the amounts to be allocated at the beginning of any financial year. This being the case, local authorities can wait until the following financial year, when actual funding levels are known, before allocating this funding to RSLs, in partnership with their housing colleagues and the Scottish Government More Homes Division. The deadline for finalising the levels of funding each local authority will provide from previous years is no later than 30 June after the end of the preceding financial year. Nothing in the above precludes local authorities from allocating funding to relevant projects at any point during the course of the year within which it is being collected. 9.3 Relationship with sums passed to Scottish Water The additional income from reducing the council tax discount or applying an increased level of council tax payable remains council tax income, and as such should be factored into the ABCD formula in full. For the purposes of calculating the amount of money to be passed to Scottish Water, in the “ABCD” formula: • A will be the total amount paid to a local authority as council tax or water services charges. This includes the amount paid as a consequence of properties that are subject to a reduced discount or council tax increase, and • D will be the total amount of council tax payable in that particular year. This includes any amounts that are due as a consequence of the reduced discount or council tax increase.
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18 10. Accounting Accounting for reduced discount should be on an income and expenditure basis. Any payments to RSLs or other organisations/individuals should be treated as General Fund expenditure in accordance with proper accounting practice. A sum equal to the additional income collected but not yet spent by the local authority or paid to RSLs or other organisations/individuals should form part of the annual accounts. Any sum not represented by a year-end creditor or provision will be required to be held as an earmarked reserve in the General Fund. All accounting entries relating to the additional income collected but not yet spent by the local authority or paid to RSLs or other organisations/individuals should be in accordance with proper accounting practice. Where reduced discount money has not been spent, it should accrue interest from the start of the financial year following the year of collection. Interest should accrue at the same rate applied to other savings held by local authorities.
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19 11. Monitoring 11.1. Broad Policy Each local authority will be required to submit a Council Tax Assumptions (CTAS) return to Scottish Government in March each year. CTAS will include details of each of the local authority’s policy in relation to the discounts and increases for second homes and/or long-term empty homes for the forthcoming year. 11.2. Notification of Income Local authorities will be required to provide details of the additional income collected on an annual basis to the Scottish Government through the Council Tax Receipts and Returns (CTRR) Q4 return. Where this resource is being allocated to RSLs or other organisations/individuals, this will allow the project planning and housing approval processes to be agreed as early as possible between local authorities, the Scottish Government More Homes Division and other strategic partners. The income collected from reducing the long-term empty homes discount below 10% or charging an increase is not ring fenced for housing and can be used at the discretion of local authorities, (although are encouraged to still use for housing priorities). As this income is treated separately from that received by reducing the discount between 10% and 50%, it will be recorded in a separate column on the annual CTRR Q4 return. Each authority will be required to provide, on the annual CTRR Q4 return, details of the amount billed and the amount received through the additional revenue generated by reducing the discount and applying the council tax increase; and, on an amended Local Financial Return, the amount designated either for local authority expenditure and/or transfer to RSLs, and other organisations or individuals. 11.3. Numbers of Properties The short-term working group on empty and second homes will consider and advise on amendments to the annual CTAXBASE form to reflect new legislation and evolving policy requirements. As stated above, homes in receipt of a reduced discount, or a council tax increase will still be counted as half a dwelling for Revenue Support Grant calculation purposes. 11.4 Interaction between second and empty homes It may be difficult for local authorities to determine whether or not a dwelling has been lived in for at least 25 days in any year, so the definition of a second home will require owners to provide evidence that the home has been lived in. Evidence may include utility bills, TV license, electoral register, short-term let activity or anything else that a local authority deems appropriate. Local authorities may use non-ringfenced income to fund enforcement and identification work, which may
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20 involve empty homes officers monitoring the interaction between declaration of long- term empty homes and second homes.
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21 12. Enforcement By the end of August each financial year, the Scottish Government will compare reported expenditure against reported additional income, which local authorities expect to generate from reducing the discount between 10% and 50%. If the two amounts do not match, local authorities will be asked for an explanation. If, following this explanation, the Scottish Government considers the money has not been directed, or will not be in the future, towards the housing activities set out under section 4 then this will be reflected within that local authority’s grant via a re- determination within the following financial year’s Local Government Finance Order, which sets out grant levels for local authorities. The money taken from the grant will then be provided to the Scottish Government More Homes Division for housing projects within the area of the local authority concerned.
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22 13. Enquiries If you have any questions or comments regarding this guidance, please e- mail ceu@gov.scot