Tax Man Knocking On Holiday Homes
Helen YoungProposals targeting 60,000 Britons with a £20million levy on holiday home may have a negative impact on small businesses and on tourism, critics said.
The Treasury is going ahead with plans to eliminate tax breaks for people who practice the business of renting out furnished holiday homes.
The Furnished Holiday Letting Scheme at the moment considers people who rent out holiday properties in Britain as traders and not as investors, as long as the homes are available for a minimum of 140 days per year, rented out for a minimum of 70 days per year and are fully furnished.
Under the schemes, the house owners can counterbalance the expenses of furniture and fittings against revenues, acquire inheritance tax benefits, apply the earnings to pension relief, pay a reduced amount of capital gains tax at the time of sale and reduce losses versus other income.
Under the new plan, holiday rental home owners would be considered as investors and lose all the tax privileges.
A preliminary version of the legislation is due this autumn in order for the new scheme to come into effect in April 2010. The Treasury says the UK is required under EU regulation to match with letting rules in the union.
But the possible £20million levy is under attack from an increasing number of politicians, low-tax activist and tourism experts.
The chief executive of the TaxPayers’ Alliance, Matthew Elliott, said this plan is greedy and ill prepared and will certainly contribute to discouraging entrepreneurs as well as slowing business development precisely at the time when the industry needs all the funds it can get in order to escape economic hardships and stimulate employment in the real economy.
Janet Anderson, the former Labour tourism minister, warned the proposals could have negative and unintended consequences for home owners, shrinking the availability of self-catering lodging as well as resulting in several job losses and harming rural and seaside communities.
/images/rssicon.jpg "Subscribe to RSS feed")
Subscribe for free and recieve the latest Self-Catering-Breaks news and stories
Filed under UK News