THE owners of to-let holiday cottages in the Yorkshire Dales and other tourist hotspots were reeling today after a little-reported decision in last week’s Budget was revealed at the weekend – and it will mean an end to their special tax advantages.

Back in 1983, furnished holiday cottages were granted “trading status” which gave them special tax breaks in an effort to boost the British tourist industry and, in particular, to persuade more Britons to take their holidays at home.

But the fine print in the Budget statement revealed that this special treatment is to be abolished from 2010, which will be a major financial blow to the owners of hundreds of cottages and flats in the Dales, Lake District and South West England.

Organisations like the Country Land and Business Association (CLA) reacted angrily, saying that the decision destroyed the political consensus between Labour and Conservatives, who had agreed a quarter of a century ago that a reduction in the number of people holidaying abroad would lessen a major outflow of sterling and help increase the number of foreign tourists coming to Britain.

CLA Yorkshire Regional Director Dorothy Fairburn said "The removal of trade status for the tax treatment of furnished holiday lettings from 2010-11 will be a significant blow to all those who let cottages in the Yorkshire countryside. This seems a perverse move at a time when we are trying to encourage more people to take their holidays in this country."

However, the move will be welcomed by campaigners fighting for more low-cost housing in the Dales, where thousands of locals have been forced out of their family villages because of soaring property prices.

Holiday lets are seen as one of the major causes of that property boom and in some honey-pot villages, more than 40% of properties are either second homes or holiday cottages.

• Full details of the proposed tax changes can be seen by clicking here