VAT cut tops New Year wish list for builders

Published:  07 January, 2013

A VAT cut for housing renovation and repair work is at the top of the New Year's wish-list for most small and medium-sized construction companies, according to a new survey.

In a major survey of members of the Federation of Master Builders (FMB), nearly three-quarters said VAT was an issue they wanted the government to address. Building Regulations, planning and finance were also listed as priority issues by over half the businesses surveyed.

Brian Berry, chief executive of the FMB, said: "It comes as no surprise that construction SMEs want this targeted reduction in VAT. Most are still struggling with falling workloads. This is about creating a level playing field and reducing the number of individuals and businesses that rely on avoiding VAT.

"It is also about boosting growth in the economy by making it easier for homeowners and landlords to commission the work they need doing on their properties. Independent research has shown that the government will quickly make up the initial loss of tax revenue owing to the growth in demand for housing repair and maintenance work."

Berry said: "This is why the FMB has responded to an EU consultation on reduced VAT rates urging European lawmakers to keep the option open for the UK government to cut VAT on housing repair work. The EU must focus on helping Europe's economy to grow and not take away existing flexibilities in the tax system. Reduced VAT rates would also encourage more people to introduce measures in their homes to reduce household energy bills and cut carbon emissions. Such measures already amount to a quarter of all work undertaken in the UK housing repair and improvement market.

"Many European states, including the UK, levy a reduced rate of VAT on the energy consumers use, so it would be perverse for the EU to forbid its member states to discount the rate of VAT on work to help save energy, such as installing energy efficient glazing, new boilers or insulation."