Sarkozy's investment revenue tax increase could hit Britons

Britons who let their holiday homes in France could be affected by Nicolas Sarkozy's recently announced increase in tax on investment revenue. Sarkozy's one per cent tax increase will be applied to property rental income as well as other investment income.

The tax rise in France has been designed to finance a French welfare plan, reports The Times. The tax, which will bring the total tax rate on investment revenue to 30 per cent, will be wide ranging and it is thought that it could affect many Britons who let their holiday home in France during the holiday season.

French officials hope that the tax increase will generate around €1.5bn per year, However, opponents to the scheme feel that it contradicts Sarkozy's efforts to attract back French tax exiles from, amongst others, Britain, Switzerland and Belgium.

The tax rise will finance a back-to-work programme, the Revenue de Solidarité Active, which will ensure that the income of welfare claimants increases once they find employment; at present some people are better off claiming benefits than in a low-paid job.

It is thought that Sarkozy's scheme will cost roughly €8.5bn per year and the French government will generate the remaining €7bn by abolishing some of the existing benefits.

This story was brought to you by holidaylettings.co.uk, the UK's No.1 holiday home website.