The For Sale signs could go up over a host of holiday homes as owners look to beat Government tax changes, a legal expert has warned.

And it has prompted concern that the UK tourist industry could be hard hit.

At stake is the fate of furnished holiday lettings (FHL) as tax advantageous rules, originally introduced in the 1984 Finance Act, are due to be axed from April 6 next year.

Eamonn Daly, senior trust and tax executive in the private client department of Stratford-upon-Avon law firm Lodders, said all income from FHLs would as a result be treated in the same way as income from any other property.

He noted: "Under current rules if landlords of furnished properties satisfy various tests, they are treated as trading.

"This means that any losses incurred can be offset against the landlords' other income for tax purposes, certain allowances - such as on the cost of furniture - and capital gains tax reliefs are available and the income can be treated as earnings for pension relief purposes."

The current tests are - the property must be situated in the European Economic Area, be available for commercial letting for at least 140 days per year and actually commercially let as holiday accommodation for at least 70 days per year. The business must be carried on with a view to a profit, and there must not be periods of longer term occupation, where the accommodation is let to the same person for more that 31 days, exceeding 155 days in the tax year.

Mr Daly said: "The proposed repeal has led to lobbying by the tourist industry who fear it might make the provision of holiday accommodation in the UK no longer financially viable.

"Plans are likely to be clarified in this year's upcoming Pre-Budget Report on 9 December.

"On the assumption that repeal does go ahead, FHL owners should carry out any necessary repairs and make any capital expenditure that qualifies for capital allowances before April 5 to take the maximum loss available this tax year before it is no longer deductible against other income.

"FHL owners could consider a sale of the property if practicable this tax year, to secure capital gains tax (CGT) entrepreneur's or rollover relief."

But he acknowledged this might be tricky given the state of the market and with property prices currently low. "Alternatively the property could be transferred to, for example, children or a trust now, to ensure that the owner benefits from the CGT relief whilst still available".

The changes are being made so the law is compliant with European legislation, with landlords of UK furnished holiday accommodation treated the same as those elsewhere in the EEA.