The Construction Products Association has urged chancellor Gordon Brown to cut VAT on repair, maintenance and improvement work and make cleaning up contaminated construction sites tax deductible in his budget on March 17.
CPA president Roy Harrison said that the UK’s mounting housing shortage made improving existing stock essential. Reducing VAT on RMI work would accelerate the process.
“We know there is enormous potential for improving the overall housing supply by encouraging the better use and upgrading of existing properties,” he said. “I strongly urge the chancellor to extend a VAT rate of 5% to all RMI work. This would help close the VAT gap with new housing provision and support a wide range of government policy objectives.”
He added that he is also asking for a lower rate of VAT on a wider range of energy efficient products to help meet government sustainable construction targets.
Mr Harrison said that the chancellor could also boost the construction sector by allowing developers to offset the cost and risk of decontaminating building sites against corporation tax liability.
“The government has set a target to ensure that 60% of all new housing provison is on brownfield sites,” he said. “However, the upfront costs and risks of decontaminating such sites can be a significant deterrent to owners and developers alike.”
