Holiday home owners who have their holiday homes here in the UK are expected to be hit by a new stealth tax at the beginning of the new tax year. Around 60,000 holiday home owners will be affected by the new taxes, wth each one being charged an extra £4000 every 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 current UK holiday home owners receive tax reductions on their holiday home because they are classed as traders. 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 these new taxes won’t be good for holiday home owners, they are good for the Government. Due to the large number of home owners being affected, the Government look to make around £20 million each year from the new taxes. Despite the Government being able to claim an extra £20 million each year, the changes could have a worse effect than first anticipated.
The new taxes could mean bad news for many holiday home owners. Many already pay high amounts for things like maintenance and holiday cottage insurance. Now because of the new taxes, home owners will be making less profits, this could result in some being forced to close down. According to analysts, these taxes could result in the tourist industry loosing £200 million each year. 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 unwelcomed news for the 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 abroad, Schofields is the place to go.
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