Reverse the government's decision to abolish VAT relief on Listed Buildings works
In yesterday’s budget, the Chancellor of the Exchequer made an astonishing, and unexpected, announcement that will affect a significant number of listed properties in the UK, and their owners.
The VAT relief that currently applies to alterations to listed buildings is being withdrawn with effect from 1 October 2012. The Chancellor described the existing relief as an ‘anomaly’, which “gives a perverse incentive for change as opposed to repair”. He also considers that the majority of the work covered by the relief consists of “extension work which is not necessary for heritage”. Admittedly, extensions currently qualify for VAT relief at present, but it does not give a true picture of the type of work that owners carry out, and which frequently qualify for relief.
Much of the work carried out is restoration work, and with VAT at 20% being payable on these works in future, home owners are likely to ‘make do and mend’ – or else purchase non-listed buildings next time. The end result, unfortunately, is that many historic buildings will simply fall into a state of disrepair.
Owners of listed buildings are subject to the usually sensible but sometimes draconian and perverse restrictions placed on them by the listed building officer at the local planning department. This results in any work, be it repair, renovation or indeed "extension" costing considerably more than if the work was done to a non listed building. The owners of such buildings are the unsung champions of our architectural heritage, trying to do the best to preserve the fabric of their building at substantial financial cost to themselves.
In the current economic climate it is even more difficult for owners of listed buildings to pay the higher repair, renovation and on occasion improvement costs such buildings attract, together with often far higher heating costs. Even for repairs the cost of listed building consent is often required. Owners have to, and want to, use specialist builders and conservation experts. They have to source specialist materials. All of this costs far more than it would in a non listed building of similar value or size. Owners receive no grants, no help from the state, and need every help they can get to continue to maintain and cherish these gems for prosperity.
Owners of listed buildings are not wealthy people, as is often erroneously thought. The majority of such buildings are not mansions but cottages, frequently owned by pensioners finding it difficult enough to cope with rising prices and falling incomes as it is.
The 20% Vat relief is at least some help towards the high cost of preserving these historically important properties. Without it many owners will have no option but to carry out temporary, cheap repairs or worse do nothing, with potentially catastrophic effects on the fabric of these buildings and their sustainable future. Most owners regard themselves as the caretakers of such buildings, looking after them for the future.
The Chancellor is correct in one sense; the VAT relief is an anomaly. It should of course include repairs and renovations. And yes, perhaps an element of the cost of "extensions" should not be allowable for VAT relief - but only if an adjustment is first made for the additional costs any extension to a listed building incurs. This would include amendments to design to take into account the listed building, specialist materials, listed building consent, specialist reports and surveys and craftsmen and workmen experienced with the care of old buildings. So probably equal or more to the existing 20% VAT relief.
Listed property owners have a hard enough time looking after the often fragile state of their homes that any disincentive introduced will, in the long-term, damage the heritage of the United Kingdom. A consultation exercise has been introduced, and I would ask 38 degrees to campaign against the change. The consultation is being headed by David Roberts who can be contacted at email@example.com. Or at HMRC, VAT Projects Team, 3C/10, 100 Parliament Street, London, SW1A 2BQ. I would also ask that 38 degrees members petition parliament and their local MP against this change.
Jenny Bailey commented
The Government have lifted the VAT Expemption rules on churches - why not on the rest of our heritage buildings? Are they not just as important?
I am an architect. My father when alive rescued and restored a cottage that has been condemned. It has been part of the Crown Estate. Years later and it much better condition it was then listed. As an architect I completely support the protection of our national heritage but have been embarrassed as a profession over some of the overly tight and restrictive controls the LA conservation architects feel they can dictate. My elderly surviving parent is a pensioner and to now have the VAT withdrawn makes me seeth with frustration - what a lack of understanding the Chancellor has shown of the issues - I will be contacting my local MP.
R Ford commented
Paying the government to protect our heritage? Should the government pay us?
I don't understand this.....on the one hand the government want's people to obide by extra rules for these houses, but on the other they aren't prepared to encourage it. Yet people (who often have large sums of money to self build) are surely being encouraged to knock down older buildings and do a new build which doesn't seem very 'green' to knock down and start again.
No VAT for repair work on all buildings (including listed buildings) would encourage us to look after what we have. Full VAT on new build would slow down unsustainable development. This is obviously the green thing to do. Simple.
Jill Pearce commented
This is very unexpected and disappointing as everyone in the heritage sector has been pushing for a reversal in the anomaly on repairs and maintenance to bring it down to zero rating rather than removing the zero rating from alterations to listed buildings. I feel it also may encourage illegal demolitions of problem listed buildings in order to build from scratch, thus avoiding VAT.
jack warshaw commented
In withdrawng the 0 vat rate on works requiring listed building consent (repairs do not require consent this government has dealt the biggest blow to the national heritage since vat was introduced 40 years ago. Chancellor Osborne, no doubt fed by his staff with high moral sounding words asserted that taking away 0 rating would discourage alterations. Utter tosh, aimed at the media and man in the street. The whole basis of UK conservation theory and practice is minimising decay and managing change intelligently in order to ensure that heritage buldings provide for the reasonable needs of those who live in or use them. Judgement about whether particular changes are desireable comes through listed buildng consent. If must therefore follow that such change is in the best long term interest of the building, For the most part the cost of change is necessarily greater, not only because of the specialist work involved and scrutiny given to it by conservation officers. but also the cost of getiing listed building consent in the first place. So the 'helping hand' provided by 0 rating has, in the almost total absence of grant aid been assisting heritage conservation with minimum bureaucracy at no cost. Every heritage body in the country has long been pressing for a matching reduction of vat for repairs, perhaps fixing the rate for both at 5% as in France and othe EU contries. But no, the Chancellor goes the other way for pure money reasons. To call a spade a spade, the move is simply a tax on private and non-vat registered listed building owners. On a rough calculation, assuming 5% of the country's half million or so listed buildings apply for LBC in any year, and an average cost of work of say £50,000, the value to the exchequer is around £1.25 billion. What's the betting the boys at the Treasury did their calculations before they thought up Osborne's cartoon justification? Yes, let's have a campaign to reverse the new tax and reduce vat for repairs as well.