Thousands of furnished holiday let owners in the Westcountry will sigh with relief, albeit possibly only for a short period, with the announcement that lucrative tax breaks for owners which were due to be abolished in April 2010 have been deferred.

It was proposed to abolish beneficial tax rules for furnished holiday let owners from April 2010.  However following the election date announcement and opposition from both the Conservative and Liberal Democrat parties, the Government has agreed to defer the abolition of the rules until after the election. 

Business Services Partner at Francis Clark LLP, Lewis Banfield welcomes the announcement: “Deferring the abolition of specific tax rules applicable to furnished holiday lets is good news for the South West economy.

“The proposed abolition of these rules would increase the costs associated with running furnished holiday lets, reducing profits and impacting on the viability of businesses in the sector.  Deferral of legislation to remove the specific beneficial tax treatment given to these businesses should help protect employment across the country, and in the South West in particular.”

Many organisations have lobbied all of the political parties to try and retain the current rules.  The Labour party has confirmed that they would continue with their plans to withdraw the beneficial tax treatment applicable to qualifying furnished holiday lets, while the Conservative and Liberal Democrat parties have confirmed that they would not abolish the beneficial tax rules.

“The beneficial tax reliefs reduce the tax burden of running furnished holiday let businesses, and enable owners to reinvest in their businesses, or pass the business on to their children tax efficiently.  Tourism is a major driver of the South West economy and provides a significant proportion of employment opportunities in the region.  The current economic situation is such that any disincentive for business owners to start up or continue to operate could impact on employment locally.”

“Of course, the issue now is one of uncertainty.” continues Lewis.  “Businesses need to make decisions based on the information they have to hand.  Many furnished holiday let owners will be planning future capital investment, and the decision could depend on whether tax reliefs are available.  Unfortunately until after the election we will be unsure whether furnished holiday let tax status will be protected, and owners will therefore need to keep an eye on the political situation when forming  a view about whether to make the investment or not.”

For further information:

Contact Lewis Banfield at Francis Clark’s Exeter office. Telephone: 01392 667000

Francis Clark has offices in Exeter, Plymouth, Salisbury, Taunton, Tavistock, Torquay and Truro. Francis Clark is the winner of the ‘Auditor of the Year - Mid Tier’ in the National Financial Directors’ Excellence Awards 2011, and LexisNexis Best General Tax Practice Award 2009. More information is available by logging on at our Online Information Centre