A new analysis of the economic impact of holiday lets has been published as part of a bid to deter future taxes.

Finest Retreats, the UK’s largest family-owned holiday lettings management company, has published analysis showing that a managed holiday let puts £10,178 a year directly into its local economy.

This is through housekeeper wages and local trades, before any guest spending. 

The findings come as Chancellor John Healey is reported to be considering reclassifying holiday lets as second homes in his Budget on October 28, removing their small business rates relief and putting that spending at risk in the tourist towns and villages that rely on it.

Guest spending in the local area adds a further £7,448 a year, taking the total to £17,626. 

Reclassification by the Chancellor would move holiday lets from business rates onto council tax, including the second homes premium of up to 100% already charged by around 84% of English councils. 

Modelling based on an average managed holiday let shows this would add £4,784 a year in council tax, cutting annual profit from £4,976 to £192, a fall of 96% before any mortgage costs. 

Each holiday let is a business in its own right, supporting a hidden workforce of local housekeepers and tradespeople.

A Finest Retreats spokesperson says: “This isn’t just a change to the tax code. It’s a hit to every tourist economy that depends on holiday lets. A holiday let is a working small business that provides work for local people and brings visitors into the community every week, and taxing it as if it were a private second home isn’t closing a loophole. 

“For many owners, this change would be the difference between staying open and selling up, and nobody appears to have considered what that means for the housekeepers, tradespeople and local businesses whose work depends on these properties being booked and used all year round.”

The proposal follows a series of changes already affecting holiday let owners, including second homes council tax premiums, visitor levies introduced or planned in Wales and Scotland, and stricter letting thresholds for business rates.