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 new stealth taxes will affect around 60,000 holiday home owners, with each being charged around £400 extra.
The stealth taxes will hit those who offer their house for atleast 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 new taxes will be coming into force because, according to the Treasury, the tax rules at the moment break European laws. This is because current UK holiday home owners receive tax reductions on their holiday home because they are classed as traders. 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.
This new stealth tax won’t come as good news for 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 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 news that won’t go down well during the current 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.
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