Holiday let owners could lose tax relief
A holiday home tax raid could be part of Jeremy Hunt’s Budget today.
The Chancellor is expected to bring in a range of new revenue-raising measures in a bid to fund pre-election tax giveaways.
Mr Hunt is under pressure to deliver tax cuts in what could be the last economic set piece from the Conservative UK Government before the next general election, which is widely expected in the autumn. It comes as the tax burden in the UK is reaching record levels.
Part of the efforts to raise income to fund other tax cuts is tipped to be a change to the preferential tax regime for holiday lets. This would be a Uk-wide measure but have a major impact on parts of North Wales with high levels of holiday let ownership.
The Sunday Times said the Government is considering scrapping the furnished holiday lets (FHL) regime, which gives extra tax reliefs on properties being rented out to holidaymakers. These include income tax reliefs for costs incurred furnishing the property which aren’t available to private rentals, as well as the ability to reduce capital gains tax in some circumstances.
According to The Sunday Times, scrapping these tax reliefs to bring FHL properties in line with other rental properties could net the Treasury around £300m a year.
This comes at a time when the holiday let sector is under pressure in Wales from changes to criteria by the Welsh Government. They have hiked the number of days a property has to be let a year to 182 for it to quality as a holiday let business.
Failure to reach that figure means properties are classed as second homes and liable for council tax, with most councils now also charging a tax premium for these type of houses.
Wales is also looking to introduce a tourism tax for those local authorities who decide to impose one, with this potentially in place by 2027.