Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 11
11
Governments share responsibility for the building safety crisis on account of their regulatory failings.
Recommendation
Governments share responsibility for the building safety crisis on account of their regulatory failings. Everyone involved would instantly have more funds to spend on remediation if the Government played its part by removing VAT on building safety activity, which would enable homes to be made safer. The Government should remove VAT on building safety activity. (Paragraph 30) Building Safety: Remediation and Funding 33
Government Response
Acknowledged
HM Government
Acknowledged
The Government is committed to supporting leaseholders and ensuring essential works are taken forward. The supply of fire safety equipment, under qualifying circumstances is already eligible for VAT relief when provided alongside the construction and renovation of residential or charitable buildings. The cost of replacing cladding can also already be zero rated if it is tied to the initial construction of the building and the cladding is shown to be defective. Although it would be possible to apply a reduced or zero rate of VAT to the renovation or repair of private dwellings, it would not be possible to limit such a rate to repairs of specific items or elements. The reduction would therefore extend to all renovations and repairs, and if we were to expand the reduced rate that is already available, it would come at an estimated cost to the Exchequer of at least £3.75 billion per year. There is also no guarantee any savings made via VAT recovery on building and renovation work would be passed on to leaseholders – as the primary beneficiaries would be product manufacturers, contractors, and developers rather than leaseholders. Given the other elements the Government is taking forward, in particular the legislative protections introduced as part of the Building Safety Act, we do not believe that further VAT relief represents the most effective way of protecting leaseholders. Tax policy is a matter for HM Treasury Ministers and tax issues are considered by the Chancellor as part of the annual fiscal process. All tax issues are regularly kept under review.