The Chancellor is planning to scrap £300m tax breaks for holiday let owners as part of his bid to fund a 2p cut income tax in the Spring Budget.
Jeremy Hunt will either ditch or eat away at a series of tax perks for these property investors during the government’s fiscal statement on Wednesday, according to the Sunday Times.
Holiday let owners can currently claim capital gains tax reliefs, plant and machinery capital allowances for items such as furniture and other fixtures, while their profits can count as earnings for pension purposes.
The £300m Hunt would save on cutting back these tax breaks, would add to the £500m a year he plans to raise from charging a levy on vaping.
These moves would help fund the Chancellor’s move to cut 2p from income tax, the newspaper says.
On Friday, fiscal watchdog the Office of Budget Responsibility said the government’s spending headroom stood at £12.5bn, significantly lower than the £30bn it said the Treasury had in its coffers in November.
Over 35,000 homes have become holiday homes or short-term lets since 2019, according to Generation Rent.
While the Department for Levelling Up, Housing and Communities says it is concerned about the long-term “hollowing out” of tourist hotspots where property prices have risen far beyond levels local residents can afford.
Generation Rent deputy chief executive Dan Wilson Craw says: “When the government cut tax relief for landlords to give first-time buyers a boost, they failed to do the same for holiday lets.
“That means that in Britain’s holiday hotspots, first-time buyers have been getting outbid not by landlords but holiday let operators, while tenants have lost out to tourists.
“The shortage of homes to live in has driven people away from the areas they grew up in. That’s why Generation Rent and thousands of our supporters, including renters who have been evicted to make way for holiday lets, have been campaigning for these tax perks to be scrapped.”
The move will be seen as part of a wider crackdown by the government on holiday let owners.
A new mandatory national register will also be introduced to give local authorities greater information about short-term lets in their area, says DLUHC.
Housing secretary Michael Gove said: “Short-term lets can play an important role in the UK’s flourishing tourism economy, providing great, easily-accessible accommodation in some of the most beautiful parts of our country.
“But in some areas, too many local families and young people feel they are being shut out of the housing market and denied the opportunity to rent or buy in their own community.”
