The FSB in Highlands and Islands is appalled at the proposed change to UK taxation which flies in the face of Government policy on tourism development.

From April 2010, income from self catering accommodation will no longer be treated as a trading business for tax purposes.  Owners of self-catering properties including hotels with self-catering units; farm cottages; static caravan parks; purpose built complexes and those with individual properties will miss out on benefits such as capital allowances; the ability to offset losses against other income and  the favourable capital gains rules for trading businesses.

Those who want to make the most of capital gains rules for trading businesses – to defer tax on the sale of an asset if you invest in another business or pay only 10% capital gains tax – will be faced with the tricky decision of whether to sell their assets before April 2010.   The result could be a substantial reduction in the availability of tourist accommodation and a serious knock on effect on those economies which depend heavily on tourist trade.

Hamish Fraser, FSB Chairman in Highlands and Islands commented:

“This taxation change is a nonsense.  The letting of self-catering accommodation is a trade like any other business and one on which many people depend heavily in the Highlands and Islands either as their core business or a supplementary part of earning a living.  To deny this sector the reliefs available to other businesses at a time when they are most needed is farcical.  It is also extremely short sited and totally contrary to the Government’s policy on improving the quality of the tourist experience in Scotland.  If these proposals go ahead, the quantity, standard and variety of available tourist accommodation will sharply decline”.

In the current economic climate, this year’s buoyant tourist season has been one of the few bright spots for businesses.   The decision to change the existing situation appears to have been taken as a result of a European ruling that the taxation benefits must be extended to all UK owned holiday letting properties in the Europe Economic Area.  In a bid to save the additional costs involved in extending the rules, the Government has withdrawn the benefits for everyone.

Hamish Fraser added:

“There appears to have been little or no consideration of the impact on rural and remote areas which rely so heavily on tourism.  We will be calling on our MPs and MSPs to actively oppose these taxation changes”

ENDS

FSB CONTACTS:

Hamish Fraser, Highlands & Islands Chairman – 07879 002710

Fay Thomson, Highlands & Islands Regional Organiser – 07917 628982

Notes
The FSB is Britain’s leading business organisation with over 215,000 members and around 20,000 in Scotland. It exists to protect and promote the interests of the self-employed, and all those who run their own business. More information is available at: http://www.fsb.org.uk