THE IMPACT of inheritance tax changes on the parks industry will cost the economy more than £130m and lead to 3,000 job losses in mostly rural and coastal communities, new figures show.
The forecast is made by in a report for the British Holiday & Home Parks Association (BH&HPA) by CBI Economics, the independent consultancy arm of the CBI.
It shows that many of the UK’s camping, holiday and residential parks are already being severely impacted by Government changes to business inheritance tax rules.
The reforms, states the analysis, could lead to a loss of over £130m in the park sector’s direct contribution to the UK economy, increasing to £294m when accounting for the wider economic impact.
Additionally, more than 3,000 jobs could be lost within the parks sector, rising to 5,300 related jobs across the broader economy.
The overall fall-out will be a reduction in economic activity for rural and coastal communities, and fewer jobs created by local businesses that rely on visitor spend.
Figures show that parks are already taking steps to mitigate the changes by cutting back on recruitment and putting their investment plans on hold.
In the budget, the Chancellor announced that 100% Business Property Relief (BPR) and Agricultural Property Relief (APR) would be capped, meaning family-run businesses could be faced with huge tax bills when the business is passed on; disrupting the business’s operations and having a negative impact on the firm’s employees, supply chain, customers and investors.
As a result, many small family-run parks – from rural campsites to glamping parks, luxury lodge operators and residential parks – could be forced to sell up in order to meet the tax demands.
But, says BH&HPA, the report also shows that park businesses of all types and sizes – of which the association has nearly 3,000 in membership – are having to make difficult decisions now.
Nearly two-thirds (62%) of family-run parks affected by the changes to BPR expect to see a 20% drop in the amount they invest in their businesses.
A similar number (63%) say they expect to reduce staff totals by 10% or more – and over one third (36%) have already cut their headcount or have put recruitment on pause.
Just as worrying, says BH&HPA, are the findings that almost one quarter of park businesses affected by BPR (24%) are considering selling up their business, or closing them down permanently.
BH&HPA says the analysis demonstrates that the Government’s aim of raising additional tax revenues has failed to account for how businesses would react.
“It is vital the Government re-examines the business case for this change and considers the true economic impact it will have,” said Debbie Walker, Director General of BH&HPA.
“Many parks are already reconsidering their futures despite offering a popular, much-loved and sustainable way for people to enjoy a UK holiday.
“Parks contribute so much to the social and economic wellbeing of local communities, particularly in rural and coastal areas, and it would be a tragedy if longstanding local park businesses were forced to close as an unintended consequence of this change in tax policy.”
The BH&HPA is calling on Government to re-examine the business case for this change.