The Professional Association of Self-Caterers (PASC UK) is leading the fight against government plans to abolish the furnished holiday lettings (FHL) tax regime.
The proposal originally appeared in the spring budget prepared by former Chancellor Jeremy Hunt. Following the election, it was hoped the scheme had been kicked into the long grass – but the policy reappeared at the end of July, just a few weeks after Labour was elected with a huge majority.
Since then, organisations including PASC UK, the Association of Scotland’s Self-Caterers (ASSC), and the Short-Term Accommodation Association have rallied to stand up for short-term rental operators across the country. PASC and the ASSC are pooling resources and will jointly attend a meeting with Treasury officials next week as part of an ongoing consultation period which will last until 12 September.
Alistair Handyside, Chair, PASC UK, is the special guest on this week's #HCHPodcast. Below is an abridged version of the interview. Click here to listen to the episode on our website. The episode is also available on Apple Podcasts, Spotify, and YouTube.
What will the impact be if the FHL tax regime is abolished?
From the data we've got so far, anything up to and above 20% of people operating as an FHL could cease doing so by April. That will have a significant impact on them personally and from a cost point of view – and they have done absolutely nothing wrong. This is not a tax loophole. This is a specific tax regime created by HMRC, which is being proposed for abolition at extraordinarily short notice.
If this goes through in anything like its current form, I believe there will be a significant loss to the sector that will then have a significant loss to rural and coastal visitor economies. The reason you have vibrant community assets like pubs and visitor attractions and restaurants is because people from outside come in and spend large amounts of money in those businesses. They're not sustained by local communities; they're sustained by the visitor economies that we support.
They [the government] are saying that there are no macro-economic impacts of this change. But we are going to be suggesting very strongly there will be significant economic impacts – on operators and the wider visitor economies, particularly in rural and coastal communities.
What would you like the government to do?
We’ve been saying consistently, for 18 months, let’s get the data first. Get statutory registration out and start to understand the real data of the sector before you start bringing legislation in. Look at Wales and Scotland, where they brought legislation in pre having the data, look at the impact that's had, and pause. The absolute minimum we've got to get is a delay because otherwise people are going to lose significant amounts of money because a legal tax regime is being removed at such short notice. And that is not equitable on any tax level.
Let's say the government gathers the data – what do you think they would find?
I think they'd be quite surprised. I think that they'd see that this is going to penalise the businesses that everybody wants to support. These aren't people putting their house up on an OTA for the summer and camping in a caravan to make some money. These are professionals. And damaging the professional end of the market will have significant outcomes.
The other thing that's happening here is that Treasury is looking at this in isolation. They're looking at FHL allowances as a very specific vertical tax. They're not looking at the vast range of interventions into our sector and the compound effect that will have. It will have even greater impacts in Scotland and Wales as a kind of final straw.
How does this potential legislation fit with a government that has been elected on a mandate of wanting to grow the economy and make people feel better off?
That's the point we'll be making. Where does this fit with the growth and recovery agenda? The government says it is trying to level this up with the long-term sector, which the previous government almost legislated into oblivion. It's not levelling up at all. Long-term landlords don't have to charge VAT. Long-term landlords have their tenants paying council tax while our businesses have to pay council tax or business rates. There's no levelling up – that’s a complete misnomer.
What is the mood among operators?
The mood isn't great. People are angry. I mean, last time they were shocked. But I think the fact that it's come back again after having gone into what we hoped was the long grass, there's quite a lot of anger as well. But we need to harness that anger and take part [in lobbying efforts] and support the sector. Get your MP to come and visit your business. Explain to them the impact it will have on your business, or your life plan, or your savings plan, or your exit plan. Explain how the removal of allowances impacts you personally as a constituent. That is the most powerful thing that you could do. Sign the petition, take the survey, contact your MP. If you do all of those things, you'll have done pretty much all you can do individually to stop or mitigate the abolition.
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