BizSale Small Business Blog. Small businesses for sale.

From next April, small business owners of holiday homes will not be able to use their properties to offset losses made on their investment or defer capital gains tax payments.

Hidden in the small print of the Budget, and not actually mentioned in the Chancellor’s speech, the decision has outraged second home owners across the UK.

Ross Elder, managing director of holidaylettings.co.uk, said that the existing rules on offsetting losses on holiday properties These rules have served to encourage greater use of holiday properties, rather than sit empty, and in turn boosted UK tourism and supported local economies. For the home to qualify as a ‘holiday property’, it needs to be fully furnished, and run as a commercial business. It must also be let for at least 70 days in a year and available to the public to rent for a total of 140 days of the year.

The rule meant that for those people facing hefty capital gains tax bills, investing in holiday homes was a popular option. There is now every likelihood that the extra tax bill on property owners will have the effect of severely raising prices for UK holidaymakers next year.

Toby Ryland, senior tax partner at Blick Rothenberg, agrees: “It’s going to make letting a second home as a holiday let less attractive. It will restrict availability and potentially push up the cost of renting a holiday home.”

At least the change in tax legislation won’t be retrospective, so the capital gains tax will not need to be paid by existing owners of holiday properties until they sell it.

Share This

If you enjoyed this post, make sure you subscribe to my RSS feed!

Earlier on this year Chris posted on the blog heralding capital gains tax concessions for small business owners, due to begin in the new tax year. As April swiftly approaches, here are some details on the initiatives’ benefits to small business owners.

As well as providing tax relief, Alistair Darling has also promised to improve access to finance for small businesses.

The Small Firms Loan Guarantee is due to be increased by £60m this year and eligibility expanded. Alistair Darling has also added £30m to the available Enterprise Capital Funds.

The Treasury is considering giving 30 per cent of government contracts to small and medium-sized companies over the next five years, as well as dropping restrictions on factoring and invoice discounting in public sector contracts.

Tax relief on the Enterprise Investment Scheme and the Enterprise Management Incentive Scheme will increase by £100k and £20k respectively.

The Chancellor is also committed to encouraging more female entrepreneurs.

The Women’s Enterprise Task Force have welcomed a £12.5m capital fund for investment in women-led businesses which is to be included in the Budget this year. The plan also indicates a nationwide media campaign and regional pilots of business centres to support female entrepreneurs.

So overall, it looks as though 2008 will be a better year for small business owners with respect to their tax position and new allowances. This new focus on assisting small businesses will not, however, necessarily make taxation any easier. Benefits to small business owners will depend on how the Treasury’s promises are put into practice.

Share This

If you enjoyed this post, make sure you subscribe to my RSS feed!