Govt to increase VAT on alterations to listed buildings

On 21 March, the Government announced in its 2012 Budget that it intends to remove the zero rate of VAT for approved alterations to listed buildings. This means that from 1 October 2012 the standard rate of VAT will apply to the alteration of a listed building.

The Government has published draft legislation designed to introduce this change to the current VAT system and is seeking views from interested parties. The consultation is open until Friday 4 May and the details of how to respond are available online here.

As members of the Cut the VAT Coalition The Tile Association believe that VAT on all home repair, maintenance and improvement work should be reduced from 20% to 5%. This targeted VAT cut would bring with it a huge number of economic, social and environmental benefits.

The Cut the VAT Coalition started with 21 varied organisations. Since work began, the EU has changed the law to allow member states to permanently reduce VAT to 5% in this area in order to support economic growth. Support for the campaign now extends to over 50 organisations and countless individuals, including some very senior politicians and well-known celebrities.

Many of the organisations supporting the Cut the VAT Campaign feel the decision to add 20% VAT to the approved alteration of a listed building will have serious negative consequences.

Loyd Grossman OBE FSA, Chairman of The Heritage Alliance:

"The very real fear is that this will discourage people from making improvements to listed buildings. It may make the difference between them having a future and losing them altogether. Previously the Treasury has never accepted that VAT was a single issue that could change development decisions, but this change may have the power to really influence decisions. I think it may prevent buildings from being altered in a way that gives them a sustainable future. Without mod cons such as kitchens, loos and disabled access, how can these buildings be adapted to modern use and earn their keep?"

Brian Berry, Chief Executive of the Federation of Master Builders:
“This move shows the Government really is out of step with the industry’s wishes and the needs of the UK’s heritage buildings. Increasing VAT on alterations to listed buildings by 20 per cent will prevent many from carrying out important improvement work, and will in turn put many more building firms at risk. If the Government is serious about supporting growth in the economy and cutting carbon it should focus on measures to encourage property owners to improve the UK’s existing buildings, and not do the opposite. The harmonisation of VAT at 5 per cent for all housing repair, maintenance and improvement work would create jobs and reduce the competitive advantage of those operating in the informal economy.”

For more information, or to share your views, please contact Beatrice Orchard FMB Public Affairs Officer on 020 7092 3876 or at This email address is being protected from spambots. You need JavaScript enabled to view it..