Back in 2015, the Ecologist was calling for changes in the tax regime around what we build:
Use VAT to reward ‘green’ refurbishment – not demolition
There’s something wrong with Britain’s sales tax regime. It is forcing homeowners into bad environmental decisions which endanger the country’s carbon reduction targets and it is undermining efforts to boost housing supply just when it seems most crucial.
When I’m not teaching students, I help run a sustainable architecture firm and entirely by accident, we find ourselves in the business of destroying perfectly good houses and sending them off to landfill, all in the name of sustainable design.
Tax, of course, is never popular. And VAT has never been a popular tax as it is paid for by purchasers – or rather, is normally paid for by purchasers. Historically there have always been some situations where VAT is charged at a lower or even ‘zero’ percentage rate.
Food (except for ‘snacks’) attracts no VAT, and neither do medicines, books and some forms of transport. There is one other area of business where the two-tier system applies: the construction industry.
Indeed, there has been a campaign in Sidmouth to refurbish and not demolish:
The Sustainable Traditional Buildings Alliance has been pushing for these sorts of measures for some time:
And they are now urging us to sign a petition:
Petition for zero-rated deep retrofit / eco refurbishment
Harry Paticas (STBA member and member of our panel of experts) has initiated a petition for the removal of VAT on deep retrofit/eco-refurbishment building works on all homes.
“This would act as a much-needed incentive for homeowners to carry out “whole house” responsible and moisture-robust retrofit works.”
The UK Green Building Council report titled “Retrofit Incentives” published in July 2013 explores these issues in section 4.5 titled “Reduced Rate of VAT for energy efficiency”. While we recognise that in 2012 there were some legal obstacles to achieving this, we urge that this matter is now readdressed.
And on the government petitions website:
Zero-rate VAT on deep retrofit/eco-refurbishment building works on all homes
We are now living with climate breakdown and urgently need to stimulate the retrofit market to reduce energy and carbon emissions of existing buildings.
Claiming the 5% rate of VAT on “energy saving measures” (VAT notice 708/6) is not straightforward and does not cover all retrofit elements.