An FSB survey has revealed that eight in ten small holiday businesses could go to the wall under new tax proposals from the Labour government.
The Government plans to change tax rules on holiday properties may result in up to eight in ten small businesses in the holiday sector closing, according to a report from the Federation of Small Businesses.
Currently furnished holiday lettings have to be available to rent for at least 20 weeks of the year and must be rented out for 10 weeks. As a result of this they receive a number of significant tax breaks. However under new government proposals businesses in the holiday sector will be considered as residential landlords rather than as trading businesses. Heather Kidd said “There are many small businesses in Shropshire that depend on holiday lettings, including farms and craft centres and these tax changes could stifle trade. Nationally there are 60,000 self-catering businesses across the country and these proposals will cost jobs. The tourism industry alone could lose £200 million a year.”
More than half of people who run self-catering accommodation, recently polled by the FSB, said that they would have to make staff redundant if the tax rules were changed, and 81 per cent said changing the rules on their tax status would affect their financial viability. Another 43 per cent said the tax rules would put them off expanding their business and eight in ten said they would not be able take on any new staff.
Heather Kidd added “The Treasury need to review the proposed changes as they could have a damaging effect on small firms and the holiday sector in Shropshire.”