Holiday home owners win reprieve over tax burden

MINISTERS insist they have come up with a "good solution" for holiday home owners after revealing plans to ease the impact of tax changes threatening Yorkshire's £6 bn-a-year tourism industry.

Thousands of holiday home owners in the region will continue to enjoy tax breaks on furnished holiday lets which Labour had proposed withdrawing before the General Election, although a quarter are still expected to lose the advantages.

The previous Government had proposed the clampdown because the benefits risked flouting European laws, sparking fears of 4,500 job losses in the tourism industry which faced losing 200m despite the changes earning the Treasury just 20m.

Coalition Ministers propose to overcome legal concerns by extending the benefits to European properties as well, but tightening rules in an attempt to stop second home owners who only use their property for personal use from claiming them.

After a consultation launched before the summer, several new concessions have been offered to ease concerns from tourism businesses and the introduction of the measures will be delayed for a year, coming into force in 2012.

The latest plans mark success for the Yorkshire Post's Give Tourism A Break campaign which opposed the plans drawn up by Labour.

Exchequer Secretary to the Treasury David Gauke said: "We've listened to the various bodies on this and we've taken a practical and pragmatic view about how we implement this.

"We've come up with a set of proposals which – given the constraint in the public finances – is, I think, a good solution. It's one which will be welcomed by a large number in the industry, given what we've inherited was something which would have scrapped tax treatment altogether, something both coalition parties opposed and I know the Yorkshire Post was very active with the Give Tourism a Break campaign."

Holiday home businesses will still be entitled to tax breaks but the qualification criteria will be tightened so it is better targeted at genuine businesses, rather than people who occasionally let others use a second home.

Tourism industry officials have welcomed most of the measures, but are still lobbying Ministers amid fears one of the changes could act as a disincentive for new operators to set up business.