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Campaign to reduce VAT on home improvements

"The Cut the VAT Coalition believes that reducing VAT from 17.5% to 5% for all maintenance and home improvement work would help the Government achieve its target of cutting carbon emissions by 60% by 2050. It would also benefit millions of UK homeowners by getting rid of cowboy builders, helping those who cannot afford vital repairs to their homes, bringing our empty properties back into use and protecting the countryside."
Full info at:

Can't see it having any effort on cowboy builders really.

jema wrote:
Can't see it having any effort on cowboy builders really.

People who charge VAT will be more reasonable compared to the ones who do things "VAT free", so I can see it making some difference.

It's a good idea, but the arguments on the web site aren't put very well. I certainly can't see it having a significant effect on cowboy builders, while work on buildings that have been empty for more than three years is not charged at the full rate even today.
Generally, though, I'd favour zero-rating building work or just hugely expanding the remit of VAT notices 719 & 708, section 18.1.
The chances of it happening are zilch, however. The Historic Houses Association has been lobbying for nearly 20 years for a change, and the only really significant alteration to the VAT rules on construction for yonks has been for church buildings. There's too much revenue involved - no government would risk it.

The French government has Wink VAT at just (from memory) 5% on insulation products as opposed to standard VAT of 19.6%.

Still doesn't make insulation cheap though Sad

The UK situation is, as you would expect, complicated!
These are some notes I compiled for those restoring old buildings, but they apply generally.
There are three categories of VAT rating on buildings; 17.5% standard, 5% reduced and zero rated. You need to look at the overall VAT position with buildings not just specifically with regard to listed buildings as because a building is listed it does not exclude it from any of the other appropriate schemes which are probably more beneficial.

Zero rating is obtained for building work to a listed building classed as alteration requiring listed building consent (but not repairs), changes to multiple dwelling buildings, construction of new houses and residential buildings being redeveloped/converted which have been empty for 10 years.

If a building has been empty for three years minimum and you can prove that with confirmation from the local authority all the work can be rated at 5%. You will need to issue a certificate as detailed in section 18.1 of VAT notice 708 to each of the contractors you use to obtain this lower rating. This lower rating also applies to commercial and agricultural conversions to residential.
If you intend to buy a commercial building for residential use you should ensure the vendor zero rates the sale as you will not be able to claim VAT back later charged on the purchase price.

When a building has been empty for 10 years, again with supporting evidence from the local authority you may have the work zero rated.

Should you have a building with more than one dwelling inside the following rules may apply: If you take down the dividing walls between dwellings and change the number of dwellings and their footprints you could be eligible for zero rating some or all of the work. Notice 708 section 7.3.1 should help prompt you to ask the questions you need.

If you choose to employ a main contractor s/he should adjust the VAT rate s/he charges according to the scheme you are using. You will need to supply him or her with the correct documents and if necessary answer any question in writing to clarify the situation as s/he will need written evidence to support any action.

Any sub contractors will charge the main contractor VAT at the standard rate; this will not affect the rate the main contractor charges you. Any independent contractors working for you directly and not through the main contractor must apply the same VAT rate as the main contractor once you have issued them with the supporting evidence.

If you decide to operate the self build scheme under the ten year ruling and act as main contractor yourself you can operate as follows: Any contractors working for you should rate the vat at 5% conversion rate and any alterations to a listed building requiring listed building consent at 0%. You must keep all your VAT receipts for materials.
Do check section 13 in notice 708 carefully to establish what materials and appliances you can claim back the VAT on.

Upon completion you must claim the VAT back but within ninety days. Ensure the 5% rate is charged, otherwise when you submit your claim it will be rejected until you go back to the contractors involved and get them to charge you the correct rate and refund you 12.5%.

Whatever you do decide to do telephone the HMRC helpline on 0845 010 9000. You need to confirm the exact interpretation in relation your circumstances. They are very helpful, so do offer them as much information as you can which you think will benefit you. It does help to be primed with the outlines of any schemes you may think appropriate first to assist them point you in the right direction. They will send you out the following documents which take a bit of understanding but again if you are unclear when trying to interpret them call the advice line and discuss it with them.
Notice 708 Buildings and construction
Notice 719 VAT refunds for ‘do it yourself builders and converters’
Notice 742 Land and property

If you hire a contractor with his or her equipment this is reclaimable but separate invoices for tool and plant hire are fully standard rated for VAT. If you separately hire scaffolding this would be standard rated, although if the labour and hire are separated the labour would be reduced rated. All professional fees are standard rated.

If you want to move into your self build scheme, you can do so the day after the work starts with no adverse effects on your claim. However, if you have a contractor doing the work s/he has to start charging VAT from the point you move in.

Do Amory and Hunter Lovins touch on this issue in either Factor Four or Natural Capitalism? (It's been a while since I read either.)
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