Last Updated on August 7, 2009 by admin
Holiday Let Tax Changes Threaten Investment, Says Industry Survey. Controversial Government plans to change the tax rules on furnished holiday lets will be a direct threat to new investment in the tourism sector, according to our new survey. We have established that the proposed removal of tax breaks on capital investment was highlighted as the top concern by 93% of holiday let owners and agents who attended a recent series of roadshows.
The Government announced in this year’s budget that it intends to scrap the so-called Furnished Holiday Lettings (FHL) rules from April of next year. Introduced in 1984, they allow the owners of holiday lets to enjoy the same tax advantages as those running other tourism businesses.
But the holiday let industry – which is worth more than half a billion pounds to the South West economy every year – says the changes will reduce the amount of accommodation on offer and cost the region’s tourism economy tens of millions of pounds a year.
Winter Rule tax partner John Endacott has been spearheading the South West campaign against the proposed changes and recently hosted six roadshows across Devon and Cornwall to raise awareness and gather evidence.
He said: “We surveyed everyone who attended our roadshows and the top concern is that these tax changes will damage investment in our holiday accommodation which is vital for the prosperity of the South West.
“Tax relief on capital investment is important in ensuring that accommodation is maintained and upgraded, so people are really worried that it could be lost. Owners also want to feel there is an incentive for long term investment in holiday units.”
Mr Endacott said the other main concerns centred on capital gains tax, followed by income tax loss relief and inheritance tax treatment.
He added: “We and the industry are quite happy to work with the tax authorities to stamp out abuses of any tax reliefs, and the Government seems most concerned about the potential for people to use trading losses on holiday lets to offset income tax. But the Budget announcement looks like an overreaction and will be detrimental to the South West economy.”
We will be presenting its findings to Treasury officials at a meeting next month and are hoping to influence the shape of draft legislation and an impact assessment that are expected to be published by Ministers in the autumn.