Repeal of Furnished Holiday Lettings
The Tourism Alliance has led negotiations with the Treasury, HMRC and the Tourism Minister. In these meetings three alternatives to the complete repeal have been suggested and the Government is considering each of these. They are:
· Extend and Raise the Thresholds for the Rules
· Classify Self-catering as a Trading Business (subject to certain criteria)
· Easing HMRC Guidance on Defining Trading Businesses
Tourism South East will continue to apply pressure to achieve a sensible compromise and we will update our members as soon as we have more information.
Background
From 6th April 2010 the Furnished Holiday Lettings Rules will be repealed. The current rules do not comply with European Union regulations so in his Budget in April 2009, the Chancellor decided to repeal the rules entirely.
The FHL rules currently allow properties that are being let as holiday accommodation for at least 140 days a year to be treated as a commercial business for tax purposes. This means that owners are able to claim loss relief, capital allowances and certain capital gains reliefs.
The repeal of these rules means that operators will find it much harder to invest in improvements to the properties and will struggle to cover any losses incurred. It is feared that the removal of this status will significantly reduce the financial viability of many holiday lettings.
Also of concern to Tourism South East and other industry bodies is the wider impact that the closing down of holiday letting properties will have on rural and small village economies where holiday lets tend to be concentrated. Rural pubs, stores and attractions are already under considerable pressure so the removal of local accommodation businesses will impact upon their customer base and, therefore viability.