Holiday home owners here in the UK who rent their house out for a large proportion of the year are expected to be hit by a new stealth tax in 2010. Around 60,000 holiday home owners will be affected by the new taxes, wth each one being charged an extra £4000 every year.

The taxes will affect those who offer their house to rent for atleast 140 days a year. Fortunately for some, out of those 140 days, the holiday home has to be rented for atleast 70 days. It wouldn’t come as a surprise if we saw some home owners offering their home for atmost 139 days a year.

The reason why these taxes will be coming in is because, according to the Treasury, the current ones 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 these new taxes won’t be good for holiday home owners, they are good 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. 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.

This new stealth tax won’t come as good news for 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 new stealth taxes, holiday home owners won’t be making as much income and this could end up forcing some homes to close. According to tourism experts, the news taxes could result in the tourist industry loosing £200 million each year. Not only will the tourist industry lose money because of less tourists finding places to stay, but jobs will also be lost due to so many closing holiday homes. Yet more unwelcomed news for the recession.

If you are after insurance for holiday homes based in the UK, or just overseas property insurance for your holiday home overseas, Schofields is the place to go.

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Filed under: Business Opportunities • Personal Finance

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