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EU opens door to VAT cuts on refurbs

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Architects are set to benefit from a new European Union (EU) ruling which could see VAT rates on renovation and repairs slashed to just 5 per cent

A decision by the EU’s Economic and Financial Affairs Council could create a wealth of new work for the profession after it granted permission for the UK and other member states to cut VAT on repairs and refurbishment of private homes from 17.5 per cent to 5 per cent.

Heritage groups have been calling for a reduction in the VAT rate for almost three decades, and the baton was recently taken up by the RIBA, which, along with a raft other trade bodies, had been lobbying for a change.

However the cut still needs to be adpoted by the UK government and, answering questions in Parliament last week, the treasury admitted it had not made any assessment of the potential decrease in VAT and had not drawn up plans to implement any change. The VAT reduction will only apply to domestic renovations - excluding a wealth of work on other historic buildings.

Even so the EU move has been welcomed as ‘fantastic news’ for architects by the RIBA. The institute’s Head of Public Affairs, Anna Scott-Marshall said: ‘The economic situation is worsening by the day and is having a profound impact on architects who are the hardest hit of the professions.

‘Architects can have a real role in this work, working with homeowners and housing associations on how to refurbish their homes. There needs to be a large refurbishment programme to tackle climate change and there is no better time to do this than now.

‘The UK government wants to cut carbon emissions by 80 percent by 2050 and if the UK decides to implement a reduction in VAT on refurbishment, this decision will help them achieve this. It will mean that energy efficient repairs and maintenance will be much more affordable for many home owners and means that the 75 per cent of buildings here today which will still be standing in 2050 can be adapted to be better equipped for the future.’

 

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Readers' comments (1)

  • This potential VAT cut is excellent news, but it would ideally only be applicable to works that will not increase the carbon footprint of the building, so for instance if extra area will result in extra heating, then this must be offset from energy savings elsewhere or addition of renewables.

    So much calculation is required for any Building Regus submission these days that this should not be a dramatic extra!

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