Tax change threatens tourism businesses

PLANNED changes in the tax regime on self-catering holiday accommodation could cost the tourism industry �200million a year and force many operators to close down, according the Federation of Small Businesses.

PLANNED changes in the tax regime on self-catering holiday accommodation could cost the tourism industry �200million a year and force many operators to close down, according the Federation of Small Businesses.

Under current rules, furnished holiday lettings attract a number of tax breaks provided they are available to rent for at least 20 weeks a year and are actually rented for a minimum of 10 weeks.

From next April, however, the Government plans to stop treating such lettings as a business activity, putting an end to a number of reliefs in areas including Income, Capital Gains and Inheritance taxes.

A survey conducted by the FSB suggests that the changes could stifle trade, threatening the existence of many of the 60,000 self-catering businesses across the country and costing jobs.


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In the poll of 166 FSB members running self-catering accommodation, more than half (52%) said they would have to make staff redundant if the tax rules were changed, and four out of five (81%) said the changes affect their financial viability.

Of those who expected to carry on, two out of five (43%) said the tax rules would put them off expanding their business.

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John Wright, FSB national chairman, said: “Taking away reasonable tax breaks from small firms that run self-catering holiday properties could have a devastating impact on the sector.

“With eight in ten small businesses in the holiday sector fearing they could go bust, there will also be a human cost, with further job cuts at a time when unemployment is already spiralling.

“Small firms know they are crucial to pulling the economy out of recession and on to the road to recovery, but they need the Government to create a tax-friendly environment to do so. The FSB is calling on the Government to 'Give us a Break' and review the proposed changes that could not only have a damaging impact on the 60,000 small businesses that own a business in the holiday sector, but on the wider community as well.”

Essex FSB regional organiser Keith Brown added: “Within Essex we have a lot of self catering holiday accommodation which means there are a lot of businesses in the county that will be hit by these changes to the tax rules.

“Tourism is an important part of the county's economy and we want to see these tax breaks continue to support the small businesses involved in providing affordable holiday accommodation at our local resorts.”

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