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The Cut the VAT coalition campaign for a cut in VAT for home improvements

The coalition are campaigning for a reduction in VAT on home improvements from 17.5% to 5%. The EU have given the green light for the UK government to for the reduction but so far the government have not made any changes.

The coalition’s main arguments for the reduction are:

1. Reap economic benefits.

Despite the actual reduction in VAT the tax take would actually go up because if the increased demand and fewer people doing “cash deals” to avoid VAT as the benefits of doing so are reduced.

2. Reduce the number of rouge traders

According to Trading Standards a staggering £170 million is stolen annually by rouge builders and traders. Cowboy builders flourish by offering customers a cheap deal by evading VAT but all too often, these rogue traders disappear with deposits, perform shoddy work and cannot be found when there are complaints. Without a proper written contract, the enforcement of consumers' rights becomes almost impossible and getting the job put right by a replacement builder can cost thousands of pounds extra.

By reducing the VAT legitimated companies can compete on a more level playing field and drive out the Cowboys.

3. Reduce the number of empty homes

The Empty Homes Agency say that we are currently experiencing a housing crisis where demand is out-stripping supply, forcing up prices for everyone in the long run despite the recession, and leaving first time buyers with little or no hope of getting onto the property ladder. Therefore you wouldn't expect there to be more than 700,000 homes in England alone with no-one living in them would you? That is the situation. Why? The reasons are many and complex, but a key one is that they require considerable repair work before they can be mad habitable, and the high rate of VAT makes it too expensive for anyone with business sense to tackle.

4. Reduce the number of those living in substandard housing

According to the Government's own figures, there are 7 million homes classed as "non-decent" in England alone i.e. substandard in terms of their state of repair, kitchen and bathroom facilities, insulation and heating. The current high rate of VAT on building repair work prevents people, particularly in low-income areas, from maintaining their homes to a decent level, especially the more vulnerable people in society such as the elderly.

5. Protect the Countryside

One way the Government has tried to tackle the housing crisis is by complete exemption of VAT on new housing. This is a good idea, but it does provide an incentive to build on greenbelt land because it is more cost effective than refurbishing existing properties. By making home improvement work more cost effective, it would encourage the use of existing buildings rather than continuing the urban sprawl by building on greenbelt land.

6. Stop the destruction of decent existing buildings

The difference between having to pay 17.5% VAT on building repair work and not having to pay any VAT on new buildings does inevitably leads to decisions which can only be justified by reference to such an unjustifiably high level of taxation. For example, in Lewisham, a school sports hall that was less than 10 years old, built with Lottery funding and in need of repair was knocked down to build a new academy specialising in sports, why? Because it was cheaper to do this than keep the old one and pay the subsequent £4 million tax bill associated with the refurbishment!

7. Increase the number of zero-carbon homes

The most cost-effective way of increasing the energy efficiency of buildings is when they undergo major renovation. Currently the VAT rates are heavily weighted in favour of demolition and rebuilding from new as opposed to renovation. While it is relatively easy to build zero-carbon homes, it is harder to retrofit the existing housing stock. Houses contribute about 27 percent of the UK's total carbon emissions but existing grants and long pay back periods offer little incentive for homeowners to make their homes more energy efficient. Reducing the level of VAT from 17.5% to 5% on maintenance and repairs to buildings would provide the kick start currently needed to encourage every home owner to make their home greener.

8. Help tackle fuel poverty.

With growing numbers of the most vulnerable people in society living in fuel poverty anything to reduce this plight should be welcomed.  Reducing the VAT would enable thousands of families to upgrade their homes to make them more energy efficient and enjoy a warmer winter thereby bring them out of fuel poverty.

9. Help preserve our national heritage

Great Britain's national heritage is threatened by the VAT burden with which repairs and maintenance work carries. Buildings of significant historical importance will continue to be lost to modern developments unless the costs of maintaining them can be reduced.

10. Allow disabled people to have essential renovations to their homes.

VAT should be abolished on all Disabled Facilities Grant works. Trying tow calculate VAT on Disabled Facilities Grant works is a minefield, with some items such as ramps and bathrooms being exempt, whilst  other essential items such as accessible kitchens, hard wearing granite worktops and bedrooms are not exempt. Charging VAT on this building work can reduce the available grant by up to 17.5% (reducing the current maximum grant of from £30,000 to just £24,750).

For more information visit the cut the VAT website here