Reducing VAT on Building Work Could Boost the Industry
A number of construction experts are calling on the main political parties to reduce the amount of VAT that is paid on property repair work and renovations. They believe that this move would not only provide much-needed support for the industry, but would also be beneficial for the country?s economy as a whole.
The pressure is building from all sectors of the industry, including many of the main trade associations such as the Federation of Master Builders, the Glass and Glazing Federation, the National Federation of Roofing Contractors and the Institute of Historic Building Conservation. They all want to see the rate of VAT for building work reduced to just 5% from the current level of 20%. They are looking to the Conservatives, Labour and the Liberal Democrats to make this commitment part of their manifestos for the next general election.
Along with a consortium of other leading groups within the industry and Experian, they have analysed what impact this reduction would have on various parts of the sector and the general economy.
Benefits of a VAT Reduction
Property owners play a large part in the growth or decline of the construction industry. If they don?t have the money to commit to projects, including building extensions or installing an iron balcony railing, then there isn?t the work around to sustain employment levels. One of the potential benefits of reducing the rate of VAT is that it would increase the number of jobs within the industry by over 95,000.
This move wouldn?t just offer advantages for the construction sector. It would also have benefits for the economy as a whole. Estimates from the Experian data show that this move could lead to an extra ?15 billion or more being put into the economy by 2020. This would be achieved by the growth in the industry, the creation of more jobs and savings in environmental damage.
Another area to benefit from lowering VAT would be the environment. Many of the improvements that people carry out on their homes are designed to make them more environmentally friendly and energy-efficient. This can include fitting new windows and doors or installing an alternative heat source. If home owners didn?t have to pay as much VAT on this work, they would be more inclined to carry it out. This could lead to 240,000 tonnes of CO2 being saved, which would have huge benefits for the global environment.
Budgeting for Home Improvements
This news might offer exciting prospects for the future, but it won?t provide any additional financial support for home owners looking to carry out work in the near future. Whether you?re planning on converting a loft or fitting an iron balcony railing, it?s important that you factor in all the associated costs before committing to the work. This includes everything from the labour and materials through to any legal costs or taxes.
Following next year?s election, a VAT reduction might become reality. However, until this point, property owners need to consider all eventualities and ensure that they have the necessary funds required for the work.