Fears are growing that Cornwall could lose up to 1.4 million visitors and more than £422 million from next year if the owners of furnished-holiday-let properties are forced out of business by new tax threats.
With more than 22,000 furnished-holiday-let properties owned in Cornwall, tourism specialists are concerned that new tax plans will force many owners to abandon the holiday-let business.
Brian Payne, chief executive of south west accountancy firm, Bishop Fleming, which has a specialist hotels & tourism team, said: “For many owners of the 61,915 furnished-holiday-let properties in this region, the Chancellor’s surprise plan to remove traditional tax reliefs will transform their financial viability. That will force owners to consider withdrawing from the sector.
“This is not just a threat to second-home owners – it can have just as much impact on self-catering units and static caravans. Added together, these properties provide a huge proportion of the region’s holiday accommodation.”
Based on an average letting period of 16 weeks, and an average of four beds per property, the affected furnished-holiday-let properties represent accommodation for 3.95 million visitors to the south west each year.
South West Tourism records for 2007 show that visitors booking furnished-holiday-let accommodations spend an average of £302 each.
Cornwall is most at risk, with 22,070 properties in the furnished-holiday-let sector, providing accommodation for 1.4 million visitors on Bishop Fleming’s conservative estimate of 16 weeks lettings for an average of four people per unit. That puts more than £442 million at risk.
Currently, the providers of furnished holiday lettings benefit from reliefs on income tax, capital gains tax, inheritance tax, and pension contributions. In his recent Budget, the Chancellor said that, from next April, all those reliefs are to be removed.
“For decades, those tax reliefs have been a significant help in enabling owners to invest in their properties, and to smooth out the huge swings in lettings-income from one year to the next in a region that is so weather dependent,” added Payne.
As the accountancy firm with the widest spread of offices throughout the south west, Bishop Fleming is actively lobbying for a Government re-think.
“We are liaising with the region’s tourism agencies, and have already written to the Chancellor and to the Minister for the South West, Ben Bradshaw MP,” said Payne.
Malcolm Bell, Chief Executive of South West Tourism welcomed the Bishop Fleming lobbying initiative. He said: “Furnished holiday lets are a vital contributor to the region’s economy. The millions of holidaymakers who rent them bring massive spending power to our local shops, visitor attractions, and restaurants.
“The owners of these properties operate as businesses: they pay business rates and other business related taxed, and should continue to be treated as businesses.”