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Holiday Homes

Volume 496: debated on Monday 20 July 2009

To ask the Chancellor of the Exchequer (1) what consultation he undertook before deciding to reclassify income from holiday lets as unearned income; (288116)

(2) what estimate he has made of the effects on the revenue of the Exchequer of reclassifying income from holiday lets as unearned income.

The Government are not reclassifying income from holiday lets as unearned income.

Income from furnished holiday lettings will continue to be assessed as property income, but after the repeal of the FHL rules, it will no longer be treated as trade income for certain purposes.

This change was necessary because the FHL rules may not be compliant with EU law, it was therefore not appropriate to consult on whether a change should be made.

The repeal was announced in the Budget 2009 in order to provide advance notice of the change, and allow those affected time to plan. Although a formal consultation is not planned, the Government do intend to publish draft legislation at the pre-Budget report, and will be happy to receive comments at that time.

Estimates of the revenue impact of this change were published at Budget 2009, and an impact assessment will be published at PBR 2009 alongside the draft legislation.

To ask the Chancellor of the Exchequer how many people claimed tax relief for expenditure on furnished holiday letting properties in each of the last five years; and how much was claimed in relief in each of those years. (288205)

I refer the hon. Member to the reply given to the hon. Member for Chesham and Amersham (Mrs. Gillan) on 5 May 2009, for estimates for 2006-07, the last full year for which information is available. Estimates for earlier years are of a similar magnitude.