Holiday home owners here in the UK who rent their house out for a large proportion of the year are expected to be hit by a new stealth tax in 2010. 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. The home also has to actually be rented for a minimum of 70 out of the 140 days. I wouldn't be surprised if we saw some holiday home owners only offering their house for 130 days a year.
The reason why these taxes will be coming in is because, according to the Treasury, the current ones break European laws. This is because currently, holiday home owners are classed as traders, meaning they pay less taxes on certain things. These new guidelines will mean that the home owners will now be classed as investors which means that will be required to pay tax.
Although this isn't good news for holiday home owners, it is good news 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.
These new tax rises won't be welcomed by holiday home owners. Most holiday home owners already have to pay high prices for essential 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 bad news for the so called recovering recession.
If you're on the hunt for insurance for holiday homes based in the UK, or maybe overseas property insurance for your holiday home abroad, Schofields is the place to go.
