New Stealth Tax Targets Holiday Home Owners
UK holiday home owners, who rent their house out for a large portion of the year, are to be hit by new stealth taxes in 2010. The tax is set to affect over 60,000 holiday home owners, charging them around £4000 every year.
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 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 currently, holiday home owners are classed as traders, meaning they pay less taxes on certain things. 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. Despite the Government making this extra £20 million, it could prove to be worse for the Government than first appears.
The new stealth taxes won’t go down well for many UK holiday home owners. The majority of second home owners already pay high prices for things like maintenance and holiday cottage insurance. Now as a result of the taxes, home owners are being charged more, therefore making less income and resulting in some holiday homes having to close down. According to analysts, the resulting action of the stealth tax could cost the tourism business over £200 million. Not only will money be lost from tourists not being able to find a place to stay, but jobs will also be lost due to the amount of holiday homes that will be forced to close. Yet more news that won’t go down well during the current recession.
If you’re trying to find insurance for holiday homes based in the UK, or just overseas property insurance for your holiday home abroad, Schofields is the place to go.
