UPDATE: Due to the election and the rush by the government to get legislation through, this tax alteration has been dropped. That’s not to say it may not be reintroduced if Labour wins the election but, for the time being, things remain as they are.
Unless you own property that is used as a holiday letting, you may not be aware of the new tax rules that come into being from April 6th. A lot of owners are giving serious consideration to selling up or stopping making their cottages and houses available as holiday lets so there could be a shortage available in the future.
What has brought this about?
For tax purposes, the government has treated the owners of holiday lets just as they treated B&B and guest house owners. But under rules introduced from the beginning of the new financial year they will be treated as property investors. By doing this, owners of holiday lets will lose tax and pension advantages. Take for example, the installation of a new central heating system. If you were a business, you could claim some tax advantages under capital allowances. Now, those people owning holiday lets can’t. So what do they do? Put prices up to you and I or grin and bear the costs? Some will, some will say that the profit has gone away and sell up or shut down. Some will move to other parts of the EU where, the government says, these rules apply but are countermanded by encouraging grants and support to those same sorts of businesses.
Why is this happening? Because the government says that the existing rules may breach EU rules. Not “do” breach rules but “may” breach them. So it has gone ahead and changed the rules and brooked no argument from the likes of Visit Britain, Visit Scotland, Visit Wales and our own marketing award winner, Scottish Borders Tourism Partnership.
So where does this leave us?
Potentially over 50,000 people in the UK provide holiday lets. If they can’t see a profit, we visitors will lose as fewer holiday lets become available.