Tax Changes to Owners of Holiday Lets

apexblue

Tax changes to UK holiday lets will affect everybody in the UK tourism business. If you are affected could you please email Winter Rule below.


Winter Rule is gathering evidence about the potential impact of the proposed tax changes in order to prepare a briefing paper for Treasury officials and Ministers. If you think your business will be affected or would like to add your voice to the campaign please contact John Endacott at Winter Rule by emailing [EMAIL="taxcampaign@winterrule.co.uk"]taxcampaign@winterrule.co.uk[/EMAIL]

Regards

trevormax

could you post a summary of what the changes are and how they will affect people? This would help you as people would know if it affects them or not.

John_Pierpoint

This is border line spam but let me post the details of the campaign for them:
(As I remember the budget, there were people "pretending" to be running a business and thus getting tax relief on their mortgages on their weekend cottage? I would have thought it fairly simple to have a ruling that the property had to be rented out to at least X different tenants per year and the rent received must cover at lest Y% of the mortgage interest in order to turn a hobby into a business?)


I look forward to a reasoned debate of the issue from other MSE members.


A campaign has been launched to fight proposed tax changes that could impact on thousands of rural business across the West Country.
Hidden in the small print the Budget were plans to change the tax regime for people who let property as holiday accommodation.
The Government, in an effort to bring the UK in line with EU law, is planning to scrap various tax reliefs available on furnished holiday lets.
Cornwall-based accountants and tourism specialists Winter Rule say the changes could have far-reaching implications for the rural economy by severely reducing the stock of quality holiday accommodation in the Westcountry.
The firm is now gathering evidence to present to Treasury Ministers before the new Finance Bill - which is published on Thursday (April 30) - is given Royal Assent in June.
The South West has around 40% of the UK’s self catering sector, and 20% of visitors to the region come on self-catering holidays.
The campaign is being led by Winter Rule tax partner John Endacott, a national expert on entrepreneurial tax issues who makes regular representations to the Treasury and HM Revenue & Customs on tax policy.
He said: “The Government is content to suggest that this is all about second homes but the impact could be felt by real businesses such as hotels with self-catering accommodation, backpacker lodges, holiday parks, static caravan sites and purpose-built holiday complexes with shared facilities like swimming pools.
“It seems that Ministers simply haven’t thought this through and what we will be arguing – with the support of the industry – is that there needs to be a clear definition of what constitutes a trading business in this sector. Instead the Government is suggesting it will treat them as something different, thereby losing them the tax advantages they are entitled to.
“There is a big risk that the proposed changes will cause the stock of high quality holiday accommodation in the Westcountry to reduce, which will have a damaging impact on our economy at this difficult time. Perversely, this change could even lead to an increase in second homes if holiday accommodation is sold off.”
Mr Endacott is planning to host a around-table discussion with industry leaders to gather evidence on the potential impact of the changes for his Treasury submission, and is already in contact with colleagues in holiday regions across the UK including Scotland, Yorkshire, Norfolk and Dorset.
The current rules include tax relief for expenditure on furniture and equipment in rental premises and relief for current year losses. The Government is planning to abolish the rules from April next year, although the full details have not yet been published.
Among those potentially affected are Robin and Alex Taylor who are investing in the conversion of some redundant buildings at Stithians in Cornwall to create high quality letting accommodation.
Robin said: “The Government is moving the goalposts. We are seeking to develop our site to provide high quality letting accommodation to attract people to stay regularly, and that will benefit local shops and other businesses. It seems that a policy intended to attack second home owners taking advantage of tax breaks will have the undesired impact of hitting not just hard working families like ours, but local communities as a whole.”
Tracey and Jeremy Griffiths run Lusty Glaze Adventure Centre in Newquay, and have furnished rental property on the site that currently qualifies as a trading activity.
Tracey said: “Small business always seem to lose out in these kind of changes. Larger businesses have the ability to absorb changes such as these but for us it has a fundamental impact on what we are trying to achieve, which is a successful business employing local people and trades people.”
The campaign is already attracting widespread support in the Westcountry.
Malcolm Bell, chief executive of South West Tourism, said: “Our region has around 40% of the country’s self catering sector and it’s a massive contributor to the rural economy. But there seems to be a view in Whitehall that this is not a real industry with people running real businesses, and that’s a total misunderstanding of the whole sector.
“This is a classic case of the law of unintended consequences and what Ministers have to understand is that these properties can have 35 to 40 families going through them a year, supporting local shops, pubs and restaurants, and aren’t just let out for a handful of weeks. Looking ahead in a difficult market, the self-catering sector is likely to become even more important and is a very good quality offer, so we do not want to see punitive tax changes that stifle investment.”
Simon Tregoning, Managing Director of specialist lettings agency Classic Cottages, marketing more than 700 self-catering properties across the South West, said: “Holiday cottage letting is the fastest growing sector in UK tourism and scrapping the tax incentives for holiday home owners makes little sense. These changes would hit normal people, from farmers who have converted barns to former coast guards who rely on the holiday letting business as a valuable source of income, not hedge-fund managers who rent out cottages for incidental earnings.
“These are not tax perks, they are just the tax advantages offered to anyone who runs a business. It is wrong to say holiday letting is not a business. Our owners host an average of 100 people a year in their properties and you would not do that unless you were running a business.
“Without these incentives, some property owners are likely to decide against letting out their property and keep it for themselves. As a result holiday homes, which are on average visited by some 25 families each year who all spend money in the local economy, will soon become second homes visited by the same individual owners just three or four weeks a year.”
Richard Baker, head of the rural services team at Stephens Scown solicitors, is also backing the campaign. He said: “These tax reliefs have helped power the rural economy in the South West in recent years and we have a lot of rural clients who have diversified into the lettings sector who would not have done so without these incentives. If the Government does scrap these reliefs then it threatens to stifle one of the fastest growing parts of the rural economy at a time when the region will need to capitalise on the likely influx of visitors who are holidaying closer to home because of the recession. If they don’t have a good experience and enjoy a high quality product, there’s little hope of attracting them in future years. That’s why this move is so short-sighted.”
Tim Jones, chairman of the Devon and Cornwall Business Council, said: “These changes are going to hit businesses big and small at a time when the tourism industry has a vital role to play in helping the region out of recession. The tax reliefs available help make this sector investable, and that creates quality accommodation which pulls in more people to spend their money in the local economy. Now the Government wants to snatch those benefits away at a time when they’ve never been needed more.”
· Winter Rule is gathering evidence about the potential impact of the proposed tax changes in order to prepare a briefing paper for Treasury officials and Ministers. If you think your business will be affected or would like to add your voice to the campaign please contact John Endacott at Winter Rule by emailing [EMAIL="taxcampaign@winterrule.co.uk"]taxcampaign@winterrule.co.uk[/EMAIL]

BigDavy

Help - having a small holiday let and doing the right thing by the Tax Man has proved a nightmare. Accountants fees are extortionate - not sure if I can do it by myself - any advice on this - is it something small holiday let owners do themselves and what are implications - any helpful advice gratefully received