IHBC & partners: VAT relief update

The Institute of Historic Building Conservation (IHBC), The Federation of Master Builders (FMB) and others in the ‘Cut the VAT Campaign’ have been promoting further their evidence on the positive effects of a VAT reduction on repairs.

The Federation of Master Builders (FMB) writes:
A VAT reduction on housing renovation and repair could boost the UK economy by more than £15 billion from 2015 to 2020 according to a new independent research report by Experian. This reduction could also create more than 95,000 jobs and save 240,000 tonnes of CO2 from thousands of homes.

The report is backed by more than 60 charities, trade associations, business groups and financial institutions that are united in calling on all three main political parties to commit to this VAT reduction in their 2015 General Election manifestos.

Brian Berry, Chief Executive of the Federation of Master Builders (FMB), said: ‘A VAT reduction on housing renovation and repair work will empower home owners to contribute to growth, jobs and greener homes without placing a burden on the Treasury. There is no other proposal that will help the UK achieve so many of its economic, environmental and social aims with so little cost to the public purse. This research shows that the wider benefits of a VAT reduction on housing renovation and repair would stimulate more than £15 billion of wider economic activity, which completely overshadows any direct losses to Treasury coffers due to a drop in the percentage charged for VAT. Berry added: ‘It is a myth that EU law prevents the UK government from reducing VAT on housing renovation and repair. This research report clearly shows that almost half of EU member states are currently enjoying the economic, environmental and social benefits that this VAT reduction can bring. Why should the UK not follow suit?’

Nigel Rees, Chief Executive of the Glass and Glazing Federation, said: ‘We are impressed with this research report and urge the government to now take the necessary action. As the report shows, reducing VAT from 20% to 5% on housing renovation and repair has significant long terms gains, not only for economic growth and job creation, but also for carbon reduction, as many contemporary home improvements will include the installation of energy efficient products.’

Ray Horwood, Chief Executive of the National Federation of Roofing Contractors, said: ‘There are a range of complementary reasons for this sensible reduction in VAT on housing renovation and repair that play to government objectives and overall consumer expectations. The strong leadership message this sends to all political parties would, in addition, be a boost and clear message of support to the responsible and qualified SME firms that will undertake this work.’

Mike Brown, Chair of the Institute of Historic Building Conservation, said: ‘The care and maintenance of our heritage buildings is often crafts-based and, as such, labour intensive, so a reduction in VAT will help support those skills and thousands of jobs across the sector. The case for the reduction in VAT is particularly important in making the difference between a historic building being saved or being unviable.

Brown added: ‘On top of that, more affordable day to day care and maintenance would help save countless older buildings from the destructive and costly cycle of decay and restoration, allowing diminishing resources to be directed towards delivering better informed energy conservation measures, compatible with the fabric of the building.’

The Heritage Alliance (THA) highlight the following main issues of concern:
The UK Government’s VAT regime disadvantages work to existing buildings by adding 20% to repair, maintenance and adaptation work – yet promotes new build with a zero rate.

This is the biggest threat to the future of our heritage. Repair and maintenance is vital. Sympathetic adaptation is now the primary strategy for securing the future of our historic buildings.

  1. Listed buildings are not the prerogative of the rich. Over 80% of our listed building are lived in by people from socio economic backgrounds B – E. They do not get grants, nor can they claim back VAT like commercial companies.
  2. The vast number of older properties even though not listed, give the UK its distinctive character much prized by domestic and international tourists.
  3. Older buildings are distributed all over the country, most of the work carried on them is by small and medium-size enterprises that make huge contributions to local economies.

Recent flooding conditions have also brought the burden of VAT on alterations to the news headlined, with several national news reports of the impact of additional costs reported by the Guardian and Sunday Telegraph collated by the Cut the VAT campaign.

Previous IHBC newsblogs on VAT

The Cut the VAT Campaign writes:
We’ve received some excellent press coverage for our campaign proposal over the past few weeks – here are some of the highlights in case you missed any of them:

Call for PM to stop taxman’s £85million ‘profit’ on flood misery, Sunday Express, 16 February 2014

Campaign to stop VAT hit on £10billion floods repair bill, Sunday Express, 16 February 2014

Consider VAT cut to help flood victims, Vince Cable tells George Osborne, The Daily Telegraph, 20 February 2014

If the Dutch can drop VAT on flooding, why can’t we?, Sunday Express, 23rd February 2014

VAT: how government can create a sustainable supply chain, Guardian, 26 February 2014

VAT cut ‘would boost economy by £15bn’, Builder and Engineers, 4 March 2014

Reduce VAT on housing repairs to save £15bn, Inside Housing, 5 March 2014

Watch: FMB calls for VAT cut on housing repair work, Construction News, 10 March 2014

FMB news release on VAT

THA article on VAT and traditional buildings

Cut The VAT collation of recent news reports on VAT

FMB/ Experian report on VAT

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