Tourism industry celebrates lifting of tax threat

THOUSANDS of holiday home owners in Yorkshire are set to benefit from new Government measures to avert a tax hit which threatened to cost the tourism industry £200m a year.

People who let out holiday homes as a business will still be entitled to tax breaks under proposals published by the Treasury yesterday, to the relief of tourism bosses.

The previous government had planned to scrap them because the benefits risked flouting European laws, sparking fears of 4,500 job losses in the tourism industry.

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Experts claimed although it would only have saved the Treasury 20m it would have cost the industry 200m.

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

It fulfils a pre-election pledge by Prime Minister David Cameron and Chancellor George Osborne to scrap the old measures which would have hit Yorkshire's 2,500 self-catering accommodation owners and marks a victory for the Yorkshire Post's Give Tourism A Break campaign. More than 4,000 individuals in the region stand to benefit, according to officials.

Tourism bosses are still wading through the fine print of the proposals published for consultation yesterday but gave the news a cautious welcome.

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Gary Verity, chief executive of Welcome to Yorkshire, said: "At first sight this appears to be a positive step forward and will be welcomed by many tourism businesses.

"Trading conditions and the economic climate is still very challenging and any positive encouragement by the Government at this time is to be welcomed."

Kurt Jansen, policy director of the Tourism Alliance, said: "We were really worried that the previous proposals would have had a devastating impact on the tourism industry and we're hopeful these measures will resolve that."

With tourism worth more than 6bn a year to Yorkshire's economy, Labour's proposals had sparked a fierce campaign.

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Experts had warned the measures could have left eight out of 10 small holiday businesses at risk of closing because they would no longer be financially viable.

Mr Osborne confirmed in the Budget he would be scrapping the plans, and yesterday Ministers published their alternatives.

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.

Businesses with properties in the European Economic Area will also be entitled to the benefits to overcome legal issues.

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Officials say four out of five properties which currently benefit are expected to carry on doing so under measures targeted at "dedicated letting businesses".

Exchequer Secretary to the Treasury David Gauke said: "Furnished holiday lettings play a vital role in any tourism industry, and the UK is no different. These proposals balance the need to make sure the rules are affordable, provide support to genuine commercial businesses, and meet our obligations under EU law.

"We really want to hear the views of local people who have an interest in these issues. The best legislation comes about through good consultation, so we would value any contributions, however large or small."

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