The Farmers’ Union of Wales today hailed the new special tax rules for Furnished Holiday Lets to be included in the 2011 Finance Bill as a step in the right direction.
However, the union believes that the changes to occupancy rates and the way loss relief is applied could adversely affect some accommodation providers in Wales.
The union welcomed the new Government’s decision to retain the special tax rules following intensive lobbying but, during a recent consultation, it highlighted the proposed changes to the criteria relating to the length of time a property is actually let, coupled with changes to loss relief, would disproportionately affect Welsh businesses offering holiday accommodation.
Chairman for the union’s farm diversification committee Deilwen Breese said: "Under the new rules the minimum period which a property is actually let will rise from 70 to 105 days.
"Given the impact of the current economic climate on visitor numbers we fear that some furnished holiday let accommodation providers could have difficulty meeting the increased letting requirements, especially in areas of Wales were there are limited opportunities to extend the tourism season.
"However, we welcome the Treasury’s flexibility which would allow businesses which meet the revised occupancy threshold in one year to elect to be treated as having met it in the two following years, providing certain criteria are met.
"This will mean that those businesses whose occupancy rate is affected by circumstances beyond their control, such as the extreme weather conditions currently being experienced across Wales, will still be eligible to qualify for these special tax rules.
"We are also pleased that the union’s lobbying for the retention of the current capital allowances and a capital gains tax relief has been successful."