Abolishing the furnished holiday lettings (FHL) tax regime will punish diversified farming businesses, rural campaigners have warned.
It comes as the Labour government publishes its draft legislation to remove the FHL scheme from April 2025.
FHL tax regime reductions currently apply to properties which are available for holiday letting for at least 210 days a year, and which are let for at least half that time.
It is thought that scrapping the holiday lettings relief should save the Treasury about £245 million a year by 2028-29.
But the Country Land and Business Association (CLA), which has thousands of farmer members, said diversification into the holiday lettings market was a 'business necessity' for many.
It explained that the short-term rental and holiday let sector contributed billions to the wider economy, supported local shops and restaurants and created thousands of jobs.
"Abolishing the Furnished Holiday Lets regime will only punish people who are helping to grow local economies," warned CLA president, Victoria Vyvyan.
“It is far from a tax loophole, providing a crucial support mechanism, strengthening the resilience and viability of many rural businesses that in turn enables them to invest in their work looking after the environment and feeding the nation.
“By converting unused or underutilised properties, that may not be suitable as homes in the private rented sector, into high-quality holiday accommodations, property owners contribute to the local community's economic vitality."
She asked: "Why are small rural businesses being punished for diversifying? This sweeping approach needs a far closer scrutiny of the perceived problem"
