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Housing: Construction

Question for Treasury

UIN 73028, tabled on 13 July 2020

To ask the Chancellor of the Exchequer, if he has made an assessment of the potential merits of reducing VAT on residential extensions and alterations to support the construction sector.

Answered on

21 July 2020

Consumers already benefit from a reduced VAT rate of 5 per cent on residential construction under certain conditions. This includes conversions of buildings from one use to another, and the renovation of properties that have been empty for two years or more prior to the renovation work.

Going further would be very expensive: reducing VAT on all property renovation, repairs and improvements would cost the Exchequer approximately £6 billion per year. Although all taxes are kept under review, the Government has no plans to review the VAT treatment of construction at this time.

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