The UK government is reportedly considering a new tax on holiday lets by treating them as second homes rather than businesses, according to recent reports. Chancellor John Healey is said to be evaluating this approach, which could significantly increase the costs for those who rent out properties for short-term stays. This potential change comes as the government faces growing pressure to raise up to £10 billion in additional revenue, partly due to the economic effects of the war in Iran. If implemented, the move could affect thousands of property owners who rely on holiday rentals for income. Alistair Handyside, chairman of the Professional Association of Self-Caterers, warned that the proposed tax could cost the average holiday-let owner between £1,000 and £3,000 annually. He noted that many owners are only making around £5,000 in profit each year and that the self-catering industry is already shrinking. Handyside emphasized that these properties provide crucial accommodation for tourists in areas that lack the hotel capacity of larger cities, and that a decline in such properties could harm local economies. Treasury minister James Murray confirmed in a parliamentary response that the government is reviewing how short-term lets are taxed, particularly in light of concerns that some second-home owners are using small business rates relief to reduce their tax burden. Meanwhile, Richard Fuller, the shadow chief secretary to the Treasury, criticized the plans as a £9 billion "business rates raid" and accused the government of compounding economic challenges with additional taxes and regulatory burdens. He urged Labour to focus instead on reducing welfare spending to ease the tax burden and stimulate economic growth. The proposed measures come just days after it was announced that Andy Burnham, the Chancellor, plans to grant England’s mayors the power to impose an uncapped tourist tax. This would allow local leaders to charge a percentage of the accommodation cost for overnight visitors, rather than a flat rate, to support budget-friendly holidays. However, hospitality leaders have raised concerns, noting that a new tourism tax in Edinburgh is already causing negative effects. Downing Street has stated that most hospitality businesses will not be directly impacted, pointing to similar visitor levies already used in parts of Europe. The Treasury has not yet commented on these latest developments.