It has also announced plans to cut inheritance tax red tape in a move designed to reduce the paperwork families need to fill out.
As part of a number of tax consultations, the Treasury said that many second-home owners are liable to pay business rates rather than council tax if they declare they intend to let it within the next year.
However, business rates are often significantly less due to discounts and many of these properties are currently benefiting from the rates holiday for hospitality and retail properties.
Of the more than 60,000 holiday lets currently eligible for rate relief, about 96% would potentially qualify for small business rate relief and would therefore pay no rates at all until at least June.
It comes amid a major review into business rates, the property tax affecting UK firms.
On Tuesday, the Treasury also confirmed that it has now published an interim report into its review on the current rates framework.
The report highlighted calls from some firms that an online sales tax could be used to compensate for lower business rates.
It said operators said an online sales tax would “more fairly distribute the tax burden that offline retailers currently face”.
However, it also flagged that most respondents believe that an online sales tax “is unlikely to replace business rates, given the large amount of revenue that is generated from business rates”.
The update also saw the Treasury say it will cut inheritance tax red tape for more than 200,000 estates every year.
It said that over 90% of non-taxpaying estates each year will no longer have to complete inheritance tax forms when probate or confirmation is required, from January 1 2022.
Jesse Norman financial secretary to the Treasury, said: “We are making these announcements in order to increase the transparency, discipline and accessibility of tax policymaking.
“These measures will help us to upgrade and digitise the UK tax system, tackle tax avoidance and fraud, among other things.”