Tax changes spark tourism fears

The CAHHA fears millions of pounds a year could be lost

Scrapping tax incentives on furnished holiday lets could cost the English tourist industry millions of pounds a year, a tourism group has claimed.

Chancellor Alistair Darling announced his intention to repeal the Furnished Holiday Lettings rules in the budget.

The change would stop second home owners gaining tax benefits by letting their properties for a short period.

But the Combined Association of Holiday Home Agencies (CAHHA) said legitimate businesses could be forced to close.

The group said Devon and Cornwall, which has about 62,000 furnished holiday lets, would be among the worst hit areas.

Consultation urged

The UK's self-catering sector generated nearly £2bn in tourism spend in 2007, rising to £3 billion if self-catering holiday camps and static caravans are included, according to figures from the UK Tourism survey.

CAHHA fears the move, which is due to come into effect next April, could cost the economy "tens of millions of pounds a year".

Alan Taylor, from Blue Chip Vacations in Torbay, Devon, said the current concessions can mean the difference between a viable business and being forced to close down.

"We are urging ministers to consult with the industry so they understand the full ramifications of these changes and the impact they will have on hard-working, legitimate businesses and property owners," he said.

The group is being advised by tourism tax expert John Endacott who called for a structured consultation document from the Treasury.

Mr Endacott said he had already been contacted by concerned holiday let agents and owners from across the UK, ranging from Cornwall to Cumbria.