Owners of holiday homes here in the UK that rent their property out for a large proportion of the year are expected to be hit by a stealth tax. The tax is set to affect over 60,000 holiday home owners, charging them around £4000 every year.
The tax will affect holiday home owners who offer their home for rent for at least 140 days each year. This will be good for some home owners because out of those 140 days, it has to be rented out for a minimum of 70 days before the taxes take force. By the sounds of that, I wouldn’t be surprised if we saw people offering their home for 139 days a year.
The reason why these taxes are coming into effect is because currently the tax rules for holiday home owners break European laws. This is because UK holiday home owners are classed as traders which means that can benefit from reduced taxes on certain things. These new tax laws will mean that holiday home owners here in the UK are classed as investors, making them applicable to more taxes.
Although these new taxes won’t be good for holiday home owners, they are good for the Government. With over 60,000 UK holiday home owners being affected by the new stealth taxes, the Government looks to make a £20 million income. Although the Government will be getting an extra £20 million a year from these taxes, it could end up being worse for them than it first appears.
The new taxes could mean bad news for many holiday home owners. The majority of second home owners already pay high prices for things like maintenance and holiday cottage insurance. Now due to holiday home owners being charged more, therefore making less profits, many holiday home owners will be forced to close down. According to tourism experts, the results of the new stealth taxes could end up costing the tourism industry £200 million. Not only will the tourist industry lose money because of less tourists finding places to stay, but jobs will also be lost due to so many closing holiday homes. Yet more news that won’t go down well during the current recession.
If you’re looking for insurance for holiday homes based in the UK, or maybe overseas property insurance for your holiday home abroad, Schofields is the site to visit.