10 Jan Could a VAT discount on home improvements help you?
Moving has always been a massively expensive undertaking, and whenever there is economic upheaval or uncertainty the property market suffers and people choose to improve rather than move – extending or refurbishing their properties instead.
Home improvements themselves are still beyond the means of many households, so a recent campaign by a number of business groups to get a cut in the cost of home improvements will doubtless be a welcome move.
FMB supports campaign to cut the cost of home improvements
The ‘Cut the VAT’ campaign, supported by the Federation of Master Builders (FMB) and the British Property Foundation, is currently lobbying for VAT to be slashed from 20% to 5% on all home improvements. Practically speaking, if this was to be accepted, then your £30,000 loft conversion could cost £4,500 less (if I’ve got my maths right).
A welcome boost to the economy
Reports we’ve seen on this have focused on the ‘green’ and ‘economic’ benefits of this. The economic side of things seems positive – making it more affordable for people to improve their homes means that more will do so, leading to more work for builders and generating more tax revenue for the government. In time this will lead to a growth in construction sector – the FMB believes an additional 98,000 jobs would be created – and the economy would blossom.
Helping us reach carbon-neutral faster
The green benefit is a little woollier in my opinion. The stated belief being that if home improvements are cheaper, the projects undertaken will be bigger and these bigger projects will be more likely to include energy saving elements – more insulation in walls, ceilings and floors, updated heating systems, LED lighting, double glazing to reduce heat loss, etc. Apparently our homes account for 20% of the country’s carbon emissions. I have a feeling this may be a slight overestimation coupled with the massive assumption that home improvements will often include energy saving elements. While they are indeed popular, unless they are specifically incentivised, I can see clients prioritising additional space or more expensive flooring over solar panels and rainwater harvesting!
All the same, anything that helps the average property owner to find new ways to love the home they’re in is a good thing, so we’ll have to watch out for how successful the ‘Cut the VAT’ campaign is at changing the government’s mind on VAT for home improvements.