Salmond wants VAT cut to boost home improvements

The First Minister of Scotland, Alex Salmond, has called on the government to cut VAT on home improvements to boost the ailing housing market.

Salmond wants the rate on home improvement works to be cut from 20% to 5% to kickstart renovation and improvement work by homeowners.

The incentive – dubbed the “conservatory tax cut” – would be a massive boost to SMEs, which carry out the bulk of home improvement work.

A report put together by the FMB, Experian and the RICS last year said more than 24,000 construction jobs and 31,000 wider economy jobs would be created by just a 5% cut in VAT on domestic repairs and maintenance work.

In contrast the same report suggested that 11,400 building jobs could be lost over the next decade as a result of George Osborne’s VAT hike from 17.5% to 20% earlier this year.

Brian Berry, external director for the Federation of Master Builders, said: “This is welcome news that senior politicians are beginning to see sense on the need to cut VAT to boost the market.

“A cut is badly needed by our members and is essential to support the government’s carbon cutting agenda and its Green Deal.”

Alex Neil MSP, Cabinet Secretary for Infrastructure and Capital Investment, said: “It is a real distortion and very unfair that full VAT is charged on renovations and repairs.

“The SNP Government has been arguing for years with the Treasury that this vat should be reduced immediately to the lowest permissible level within the EU, i.e. 5% instead of 20% as at present. Such a move would act as a major stimulus to the building industry at a crucial time when it needs it.”