Can net zero carbon targets be helped by a change in tax such as VAT to zero for refurbishment and reuse and 20% on new build?

Question

Tom Spilsted · Answer

This answer from Simon Newark was posted on LinkedIn.
We have a range of VAT treatments in the construction sector already but, Government and society's needs have probably outpaced the original objectives. There is a consultation currently looking at VAT in the construction sector. We have 0% for new resi and 5% for resi conversions or renovating empty resi, as well as VAT refunds for many resi projects. At present, refurbs of existing occupied resi suffer full 20% VAT. Politics could drive VAT relief for increasing the housing stock but not reducing it, so keeping the current 5% rate for converting a house into flats or commercial to resi conversions (or even down to 0%), but not for reducing housing. Relieving VAT on refurbs of existing occupied resi would be a radical move though and would have to be balanced by taking away a relief elsewhere. The biggest beneficiaries could be owners of large expensive houses which might not be politically expedient. In the commercial sector much of the VAT charged can be reclaimed anyway so there is less imperative or political will to change anything.
The UK's current approach to VAT & green taxation is an utter mess particularly in the construction sector, and this would benefit from a major overhaul.

Can net zero carbon targets be helped by a change in tax such as VAT to zero for refurbishment and reuse and 20% on new build?

Refurbishment

Reuse

Net-Zero

zero-carbon

Tax

VAT

Tom Spilsted

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