Local issues

HOTEL BUILDINGS ALLOWANCE

I have protested to the Chancellor of the Exchequer about the Government’s proposal in the Budget this year to abolish the Hotel Buildings Allowance, following representations to him by the Bournemouth Area Hospitality Association.  The Allowance meant that, when a new hotel building was constructed, 4% of the construction cost could be claimed against profits chargeable to tax.

I believe that its abolition, together with the increase in small companies tax, will not only deter new investment but will place huge burdens on the hospitality industry.  I have pointed out to the Chancellor that it will be particularly damaging for many businesses in Bournemouth, especially if its application is retrospective, and have asked him to amend the proposal.

The Chancellor passed my representations to the Financial Secretary to the Treasury who has confirmed that the Hotel Buildings Allowance will indeed be scrapped but claims that they will offset by a new Annual Investment Allowance from 2008.

I have, however, made it clear that I am very disappointed at the Treasury’s position on this matter and have asked whether the Annual Investment Allowance will be extended to holiday lettings’ businesses as well as traditional hotels.