New Stealth Tax Targets Holiday Home Owners
Owners of holiday homes here in the UK that rent their property out for a large proportion of the year are expected to be hit by a stealth tax. The new taxes look to affect over 60,000 holiday home owners, each one being charged an extra £400 each year.
The taxes will affect those who offer their house to rent for atleast 140 days a year. The home also has to actually be rented for a minimum of 70 out of the 140 days. It wouldn’t come as a surprise if we saw some home owners offering their home for atmost 139 days a year.
The reason why these taxes are coming into effect is because currently the tax rules for holiday home owners break European laws. This is because UK holiday home owners are classed as traders which means that can benefit from reduced taxes on certain things. The new stealth taxes will mean that holiday home owners are named as investors, not traders, meaning they will have to pay more taxes.
Although this won’t be good for holiday home owners, and the tourist market, it will be good for the Government, atleast for a while. 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 making this extra £20 million, it could prove to be worse for the Government than first appears.
This new stealth tax won’t come as good news for holiday home owners. Many already have to pay high amounts for essentials 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 tourism experts, the results of the new stealth taxes could end up costing the tourism industry £200 million. Not only will money be lost from a reduced amount of tourists, but jobs will also be lost with the increased amount of closing holiday homes. Yet more unwelcomed news for the recession.
If you are after insurance for holiday homes based in the UK, or for overseas property insurance for your holiday home abroad, Schofields is the place to go.