Holiday property tax carnage for tourist sector SMEs

Changes to the taxation of holiday properties could spell disaster for 8 out of 10 small businesses in the sector, says FSB.

By News Desk
25th November 2009 at 16:52

New tax regime threatens holiday property sectorThe Federation of Small Businesses (FSB) today warns that 8 out of 10 small businesses in the holiday property sector could face bankruptcy, if a new tax regime comes into force next year without challenge.

Currently any furnished holiday letting must be available for rent for at least 20 weeks a year and must be rented for 10 weeks.

This type of self-catering accommodation, representing 60,000 small businesses, therefore attracts tax breaks.

Under the new tax regime which comes into force in April 2010, holiday cottages will cease to be considered trading businesses and owners will be classed as residential landlords.

81% of self-catering firms surveyed by the FSB said the change in their tax status would threaten their financial viability.

A similar number said they would not be able to take on more staff as a result.

John Wright, chairman of the FSB, said:

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 tourism sector is always fragile when the economy is weak, so the new tax regime seems particularly harsh.

Definitely time to get behind the FSB’s ‘Give us a Break’ campaign.

[Picture credit: Justin Beckley licenced from Flickr]

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