Taxing Away a Tourism Lifeline

The tourism industry in Cornwall has faced numerous challenges, including storms, economic downturns, and global pandemics. However, the latest threat – a tax hike on holiday cottages – is particularly alarming for owners who are already struggling to stay afloat.

For Molly and Matthew James, who run Croft Farm Holiday Cottages near Perranporth, this tax would leave them in an extremely difficult position. They’ve been hit hard by Storm Goretti, which destroyed 43 trees on their property, and their business has taken a significant hit as a result. The couple’s concerns are echoed by many others in the industry.

According to James Norton, Director of Toad Hall Cottages agency, the holiday let industry is reeling from a series of tax increases and regulatory changes. “It’s decimating the industry,” he says. “We’re losing a lot of holiday cottage owners for whom it’s just not economically viable anymore.” This trend has far-reaching consequences, affecting local businesses like restaurants, bakeries, and shops that rely on tourism revenue.

The visitor economy sector accounts for 15% of the Cornish economy, generating £2 billion in annual spend. If the holiday let industry declines, this revenue stream will disappear, putting jobs and local businesses at risk. The impact is not limited to owners; it also affects the broader community, including restaurants, shops, and other small businesses that rely on tourism.

The tax hike is symptomatic of a larger problem: the increasing burden on small businesses. As regulations and taxes continue to pile up, many are struggling to stay afloat. The Jameses’ experience is not unique – their turnover has dwindled since Covid, and business rates have increased year on year.

Classifying holiday cottages as second homes rather than businesses is a misguided move by policymakers. This approach ignores the significant income these properties generate for local economies. By lumping them in with residential properties, policymakers are essentially pricing out small businesses that are already struggling to survive.

The future of tourism in Cornwall hangs in the balance if the holiday let industry continues to decline. The consequences will be far-reaching, affecting not only owners but also the local economy as a whole. It’s time for policymakers to think beyond short-term gains and consider the long-term consequences of their actions.

As the government prepares its next Budget, it would do well to listen to the concerns of businesses like Croft Farm Holiday Cottages. The tourism industry is not just a revenue generator; it’s a vital lifeline for local economies. Policymakers should stop taxing away this sector and start supporting small businesses instead.