Page last updated at 15:20 GMT, Wednesday, 22 April 2009 16:20 UK

Tax blow for holiday-home owners

Cumbria
Holiday homes are popular in areas such as Cumbria

Thousands of UK holiday-home owners face losing a range of tax benefits under changes announced in the Budget.

From April next year, holiday property landlords will no longer be able to write off "trading" losses from second homes against their tax bill.

Capital allowances and capital gains benefits will also go.

Tax experts say the move is likely to anger tens of thousands of people - many of who based retirement plans on the current tax rules for second homes.

In a small silver lining, those owning homes within the EU, but outside the UK, will get the tax benefits currently enjoyed by owners of UK holiday homes until April 2010.

However, these will then also be scrapped.

BUDGET 2009

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"You are going to see a very vocal, articulate section of society screaming blue murder about this," said tax expert Anne Redston, Visiting Professor at King's College, London.

"People have bought holiday properties and worked out their projections based on the tax rules as they exist at the moment."

Currently a home qualifies as a holiday property if it is furnished, being run as a commercial business and available for rent to the public for at least 140 days per year. It must also be let for at least 70 days a year to attract the tax benefits.

HM Revenue and Customs said it was extending the tax benefit to those owning holiday homes inside the EU but outside the UK until next April because it feared it was unlawful to have the current discrepancy.



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