UK holiday home owners, who rent their house out for a large portion of the year, are to be hit by new stealth taxes in 2010. The new stealth taxes will affect around 60,000 holiday home owners, with each being charged around £400 extra.
The taxes will affect those who offer their house to rent for atleast 140 days a year. The holiday home also has to be rented out for atleast 70 of those 140 days that it’s available. I wouldn’t be surprised if we saw some people renting their houses out for 139 days a year.
The reason why the tax is coming into play is because, according to the Treasury, the current tax rules 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 the new stealth taxes will hit holiday home owners hard, it appears to be good for the Government. With around 60,000 UK holiday home owners being hit by the new stealth taxes, the Government looks to make around £20 million. Despite the Government being able to claim an extra £20 million each year, the changes could have a worse effect than first anticipated.
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 as a result of the new stealth taxes, holiday home owners won’t be making as much income and this could end up forcing some homes to close. According to analysts, the resulting action of the stealth tax could cost the tourism business over £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 news that won’t go down well during the current recession.
If you’re on the hunt for insurance for holiday homes based in the UK, or for overseas property insurance for your holiday home overseas, Schofields is the place to go.
