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 stealth taxes will hit those who offer their house for atleast 140 days each 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 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 these new taxes won’t be good for holiday home owners, they are 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. 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.
The new taxes could mean bad news for many holiday home owners. The majority of second home owners already pay high prices for things like maintenance and holiday cottage insurance. Now due to holiday home owners being charged more, therefore making less profits, many holiday home owners will be forced to close down. According to analysts, the resulting action of the stealth tax could cost the tourism business over £200 million. The tourist industry won’t just be losing money though, due to the number of holiday homes that will have to close, a number of jobs will also be lost. 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 abroad, Schofields is the site to visit.