Tax rise is harming industry and economy, says FMB and RIBA

The VAT hike on alterations to listed buildings, announced by the Chancellor in the Budget, is already causing projects to be cancelled or scaled back, the industry has claimed.

In last month’s budget the Chancellor said a VAT rate of 20% would be applied to renovations of listed buildings from 1 October, where before they had been exempt.

A coalition of 17 organisations, including the Federation of Master Builders, the Royal Institute of British Architects, the Building & Engineering Services Association and the Electrical Contractors Association has written to the Chancellor to complain the changes to tax are already threatening the preservation of Britain’s listed buildings.

It said: “This change will clearly have an adverse effect on the construction industry, causing projects to be cancelled or curtailed. Apprenticeship places will be put at risk, closing the door on the next generation of trades people with specialist heritage construction skills and making it even harder to look after our historic buildings in the future.”

The letter said work to upgrade historic town centre buildings, to convert redundant farm buildings into housing and renovate town halls for community use were all under threat.

Pointing to the latest growth figures, which saw construction output fall by 3%, it added: “It is very hard to understand any decision that leads to a further fall in construction activity at this time. Far from encouraging a sustainable private sector led economic recovery; this decision will further hold back growth in important sectors of the economy.

Brian Berry, chief executive of the FMB, said: “The government’s decision to remove the zero rate of VAT on approved alterations to listed buildings makes it so much harder to give them a sustainable future. Sympathetic alterations are often needed to ensure our historic buildings can continue to be of social, cultural and economic value.”

Meanwhile, a petition calling on the government to drop the VAT hike for listed churches, one of the biggest groups of buildings affected, has gained over 23,000 signatures.