Shadow chancellor George Osborne has unveiled the Conservative party’s plans for the British tourism industry ahead of the upcoming general election.
Speaking to an industry audience in Blackpool, Mr Osborne outlined plans to reverse Labour changes to furnished holiday lets legislation and create a range of new travel industry internships.
Ahead of an expected May 6th election, Mr Osborne also stated a Tory government would introduce cuts to corporation tax in order to “rebuild the economy” and boost one of the “jewels in the crown of the British economy”.
Furnished Holiday Lets
On April 6th this year the rules for furnished holiday letting accommodation in the UK will be repealed.
As a result, the current advantageous tax treatments available to owners of such properties will no longer be available; including certain capital gains tax (CGT) reliefs, capital allowances and offsetting any losses.
Key to Conservative plans is an initiative to reverse the economic impact of this abolition, which could impact on as many as 120,000 UK businesses.
“We will do this is a way that is fiscally neutral, and consistent with our commitment to cutting the deficit and restoring the public finances to health,” explained Mr Osborne.
“My team is working with tax and legal experts to explore how this should best be achieved, including proposals to change the eligibility thresholds and amending the interest deductibility criteria.”
Mr Osborne argues the net cost to the UK economy of the repeal could be as much as £200 million, while the Tourism Alliance says 4,500 jobs could be lost.
ABTA chief executive, Mark Tanzer, welcomed the announcement and said: “It is good to see the Conservatives taking issues like reform of furnished holiday lettings seriously.
“Issues like FHL won’t feature highly in political party broadcasts in the coming election but are critical to our sector’s financial health. Recognising the failings in the current proposals is a good step forward.
“ABTA is calling on the government to take similar steps in the upcoming Budget,” he added.
In a wider perspective, Mr Osborne promised to boost the British economy with a cut the headline rate of corporation tax - down from 28p to 25p - by abolishing complex allowances and reliefs.
“We are aiming to create the most competitive tax environment of any major economy,” said Mr Osborne.
“To help small business – and I know that 80 per cent of tourism businesses are SMEs – we will lower the small companies’ rate to 20p, once again by reducing complex reliefs.”
There are also plans to introduce a new tax break that means no new business started in the first two years of a Conservative government will pay Employer National Insurance on the first ten employees it hires during its first year.
“These supportive comments from the shadow chancellor for domestic tourism are very welcome,” added Mr Tanzer.
“Domestic and inbound tourism is the backbone of the UK tourism sector but we would also like to see how the Conservatives will approach outbound tourism. Outbound tourism is not a marginal policy area.
“Last year over 60 million trips abroad were made by Britons meaning this is an area that warrants serious policy consideration.
The British tourism industry supports over 2.5 million jobs and 200,000 businesses.
The sector generates over £100 billion of revenue each year – and provides training opportunities for thousands of young people every week.
To support this sector the Conservative party will fund 200,000 apprenticeships and pre-apprenticeships, 100,000 work pairings and 100,000 further education college places.
However, how many of these will be in the tourism industry remains unclear.