Cut VAT on extensions and repairs
Building extensions should be reduced VAT, just like building new homes is
Housebuilding companies just pay 5% Value Added Tax when they build new homes – cutting the costs by 20% (the current rate of VAT). The government justifies this – and the HomeOwners Alliance supports it – on the grounds that we need to encourage housebuilding to overcome the housing shortage.
But another way of overcoming the housing shortage is to encourage people to extend the living space in their homes. Increasing a one bedroom home to a two bedroom one by converting the attic or attaching a new bedroom at the back can turn a property only suitable for a couple into a home for families with children. But unlike housebuilders, if you extend your house in this way, you have to pay VAT, increasing the costs by 20%. This tax on building new bedrooms makes it too expensive for many homeowners to consider extensions.
Building work done by homeowners that increases the living space of a home should be treated the same as building a new home – it should be VAT free. And builders who undertake this type of work should have the same perks as housebuilders.
We have written to the planning minister, Nick Boles, to respond to the government’s consultation on permitted development rights. We took this opportunity to again raise the issue of cutting VAT on extensions click here to read our letter
Have you been put off building an extension or converting an attic because of VAT? If so we would like to hear from you. Or, better yet, email your MP.
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