The UK government has been given the power to cut VAT on home maintenance and repairs (RMI) to 5% by European finance ministers meeting in Brussels.
The ministers voted in favour of allowing EU member states to make the cut at a meeting yesterday. Previously, EU states could not apply a VAT rate of less than 15% in order to avoid big price discrepancies across the EU single market.
Construction sector organisations have welcomed the move, which if taken up by the government could boost the level of RMI work and sales of building materials, including timber as more people are persuaded to carry out extensions and conversions.
“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,” said Brian Berry, director of external affairs at the Federation of Master Builders.
“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. The EU experiment where VAT has already been cut in parts of Europe already proves that a cut will increase Treasury revenue as well having many social benefits such as creating a greener, more energy efficient housing stock and tackling the growing issue of fuel poverty.
“All we need now is for the UK government to act quickly and decisively”.
