REGENERATION NEWS: Coalition renews tax reduction call

Renewed calls for VAT cuts to promote regeneration have been issued by a coalition of built environment organisations ahead of a crucial EU meeting on tax rules this week.

The group, which includes the Civic Trust and the Royal Institution of Chartered Surveyors (RICS), wants to see VAT on maintenance work on housing and historic buildings cut from 17.5 per cent to five per cent.

The coalition believes that the tax, which does not apply to new building work, encourages demolition of older buildings and hinders the more sustainable option of bringing them back into use. The rules also encourage "rogue builders" who avoid the levy by working for cash, the coalition insists.

"Reducing the rate of VAT on repair work would act as a catalyst to development," said Martin Bacon, chief executive of the Civic Trust. "It helps tackle housing renewal issues, is more environmentally friendly and encourages sustainable growth."

The call for cuts came in advance of a meeting of the European council of economic and finance ministers, due to be held as Planning went to press. The meeting is part of a review of the EU's VAT directive.

The coalition is urging chancellor Gordon Brown to use the opportunity to reduce the levy on repair work. "The arguments for change are strong," argued David Nelhuish, senior policy officer at the RICS. "But the Treasury also has other VAT priorities, including cutting duty on energy-saving materials."

Glyn Roberts, a member of the RTPI regeneration panel, said that tax cuts on repairs would increase the number of regeneration projects across the UK. "They make sense in the context of the government's sustainability objectives," he said. "Reducing the tax would make marginally viable schemes viable and would mean that both public and private money could go further."

A Treasury spokesman said that EU agreement is essential for the UK to cut any VAT rates, but stressed that the government "takes its responsibilities towards the built heritage seriously".

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