Page last updated at 15:40 GMT, Monday, 8 February 2010

Holiday let owners fear tax changes may cost millions

Holiday let
Running holiday lets is a business, not an investment, owners say

Millions of pounds and more than 2,000 jobs could be lost in the South West because of proposed changes to tax breaks for self-catering companies.

Many tax allowances will disappear in April in order to bring the UK in line with European law.

Until now furnished holiday lets have been recognised as an official trade in parts of the tax system, meaning owners could claim allowances for some costs.

Now many say without these tax breaks, they may be forced out of business.

When Chancellor Alistair Darling announced his intention to repeal the Furnished Holiday Lettings rules, the Combined Association of Holiday Home Agencies warned Devon and Cornwall would be among the worst hit areas.

They've changed the rules and pulled the rug out from under our feet
Phil Culver-Evans, holiday let owner

Phil Culver-Evans, who has holiday lets at Willand, near Cullompton in Devon, said without being able to offset furniture and fittings against his inland revenue bill, he will struggle to survive.

"The commitment required is quite substantial," he told BBC News.

"You have to change the sheets, clean properties from top to bottom every week and meet and greet guests when they arrive.

"To my mind that's clearly a business and not an investment."

About 30% of all money spent on self-catering holidays in the UK comes to the region and the Tourism Alliance has estimated the loss of tax allowances could cost up to £110m.

St Ives
Devon and Cornwall have an estimated 62,000 furnished holiday lets

However, the Treasury has said other tax breaks are available, but it must ensure UK businesses comply with European law.

The change is designed to stop second home owners gaining tax benefits by letting their properties for a short period.

But with an estimated 62,000 furnished holiday lets in Devon and Cornwall, self-catering owners claim it should not apply to them.

"Quite frankly, I'm beginning to wonder what to do," Mr Culver-Evans said.

"We bought the properties deliberately so we could have a business to run, but they've changed the rules and pulled the rug out from under our feet."

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