5% VAT Rate On Home Improvements Gets EU Go-Ahead

Yesterday's the EU Economic and Financial Affairs Council ruled to allow member states to lower VAT on renovation and repair of private dwellings from 17.5% to 5% comes after months of campaigning by trade bodies and MPs.

The news has been welcomed by organisations connected to the construction and property sectors who have been campaigning for VAT to be cut in the UK.At present eight building firms are going bust each day according to PricewaterhouseCoopers, and the Royal Institution of Chartered Surveyors predicts that 300,000 construction jobs will be lost during the course of the recession.

A 5% VAT rate on home improvements was one of the main points of the Get Britain Building manifesto set up by a coalition of MPs and trade bodies last month. It has also been the focus of a long-running campaign led by the Federation of Master Builders (FMB).

Brian Berry, director of external affairs at the FMB, welcomed the decision, saying: “News that the UK government now has the option to reduce VAT to 5% on home maintenance and repairs is very exciting, as it can no longer blame Brussels for not being able to take action. If the UK government goes ahead and implements the VAT cut it could mean that many more small building firms will be able to stay in business.”