My recent euphoria on an earlier previous post that included the words “possibly some good news on listed buildings” was somewhat deflated on the afternoon of the Budget.
With effect from 1 October 2012, the VAT relief that currently allows zero rating for certain types of work on listed buildings has been withdrawn. As a result of the Budget announcement, if work is carried out before 1 October 2012, it can still be zero rated; work done after that date will be liable to 20% VAT, unless any other relief happens to be available.
HMRC have announced a transitional relief, such that if a written contract was in place prior to Budget Day, for work to be carried out, the zero rating can still continue until 20 March 2013.
Unaffected by the Budget announcement is the 5% VAT rate for the following:
1) Where the house/flat etc. has been empty for 2 years prior to work starting;
2) Where the number of dwellings within a property is changing, up or down. For instance, splitting a property into flats, or vice versa;
3) Where a commercial property is converted into a residential property (eg a barn conversion);
4) For the installation of energy saving materials.
Also unaffected is the DIY Housebuilder’s Scheme, which allows VAT refunds in certain circumstances.
Well, what can I say, except that this is an appalling decision, to remove what little assistance there is, from those who are effectively looking after the heritage of this country. It is also appalling to dress up the change as ‘removing an anomaly’, and to suggest that “the majority of the work covered by the relief consists of extension work”. Has there been a survey of any description, that might prove this to be the case? I deal with listed properties every day of my working life and can assure you that this is not true. The majority of owners I deal with are people who care about their properties and much of what they have to do is to remove inappropriate features within the property that have been created, often before the property was listed. That work would have benefited from the VAT relief and the end result of removing the relief is that older properties will simply decay. With little encouragement to improve the property, many owners will simply put up with what they have, or else not buy a listed property in the first place. The end result will be the same – untold damage will be done to the heritage of the UK.
Any readers who care about historic property are encouraged to complain to their MP.