Budget move 'poses threat to tourism'

INVESTMENT in East Anglia's self-catering cottage industry could be hit as a result of a tax change hidden in the small print of Wednesday's Budget, it has been warned.

Special tax privileges aimed at encouraging landlords to provide furnished holiday lodgings will be scrapped from the 2010/11 tax year.

The Country Land and Business Association (CLA) has warned the removal of trading status for furnished holiday lettings in the UK could cost the tourism industry millions of pounds.

And Chris Scargill, partner and tourism specialist at chartered accountants and business advisers Larking Gowen, warned: “The long term effect of these changes could well be a reduction in the amount being invested in the region's self-catering properties, which would not be a welcome step.”

Favourable tax rules currently apply to furnished holiday accommodation. To qualify, the property must be let for 10 weeks of the year, available for letting for 20 weeks of the year, and not normally let for more than 31 days to the same person. The rules were first introduced in 1983 to boost the provision of accommodation and tourism in the UK.

CLA chief tax adviser Adrian Baird said the move destroyed a political consensus that has existed since 1983 that it was right to encourage self-contained property for UK holidaymakers.

“You would have expected such a major tax change to have deserved an explanation in Mr Darling's Budget speech,” he said.

Mr Scargill said the good news was the change did not come into effect for a year.

“However, from April 6, 2010, these key changes will restrict relief for losses and lose some beneficial capital gains tax reliefs. Allowances for fixtures and fittings will be lost along with a number of other changes,” he said.

“Property owners will need to act quickly to ensure they maximise the current tax relief available. However, the long term effect of these changes could well be a reduction in the amount being invested in the region's self-catering properties which would not be a welcome step.”

He added: “As is often the case, these changes were hidden in the background notes to the Budget.”

* The Government has conceded that coastal landowners must have the right to appeal against the imposition of the proposed coastal footpath across their land.

Nicola Currie, eastern region director of the Country Land and Business Association, which has been lobbying for the right of appeal, expressed delight at the concession which came as the Marine and Coastal Access Bill was being debated by the Lords.

“It was wholly wrong that the creation of a path intended for everyone should at the same time have robbed individuals of their rights,” she said.