VAT cuts could help ease the housing crisis

29 November 2016

David Wilson

While the government has recently asked the Office of Tax Simplification (OTS) to carry out reviews on aspects of the VAT system, this review will however avoid any more fundamental review of VAT rates. 

But why? Surely the UK should be making more use of, and widening the scope of VAT reduced rates.

Like our EU neighbours, the UK has the authority to apply VAT at the reduced rate to many labour intensive services provided direct to the customer, including the application of VAT at the reduced rate to household repairs, renovations and improvements.

While the construction and sale of new homes is afforded VAT at the zero-rate, a dwelling must be uninhabited for at least two years before it is afforded reduced-rated VAT relief on any repairs, renovation or alteration works.

Surely when there is such a shortage of residential dwellings available in the UK, a home-improvement initiative affording VAT at the reduced-rate to household repairs, renovations and improvements would result in increased demand from customers and stimulated growth in the economy. It would also create job opportunities and maintain existing housing stock. 

For more information on this issue, please contact David Wilson.