They say that death and taxes are the only two certainties in life. I am sure there are a few more but this quote helps emphasise the impact of central taxation on our daily lives.
Before we forget, I am an Architect and I have
some strong views on why this subject matters.
We live in challenging times – times when the
Chancellor Rishi Sunak will no doubt be looking to
amend taxation to pay for the costs of the last six
months’ pandemic.
Personally, I would advocate some changes to
stimulate the building economy. The construction
industry which employs 2.7m in the UK is a fast
way to inject energy into the economy.
We have several peculiar tax rules – in particular,
the rules on VAT on building works, which never
seem consistent.
A person building a new house can claim back VAT
on the build, (not on the consultants’ fees) and
effectively build at zero rate, whereas a person
converting a building must pay VAT at 20%.
I have commented before of the unfairness of this
and the lack of incentivisation within the system
for recycling and reusing our building stock.
The rules become even more confusing on
renewables. Over the last few years large numbers
of people have installed PV panels, solar thermal,
and insulation. For green systems, taxation was set
at 5% VAT, which was a good incentive for people
to invest and do their bit for energy conservation.
But then this changed last year and now 20% is
applied to green systems – hardly encouraging
people to make the investment in new energy. To
make matters worse you only pay 5% when buying
coal for your fire, a fossil fuel. It doesn’t make any
sense.
So again, we could encourage people to invest in
home improvements or install energy efficient
systems by reintroducing lower rates of VAT.
I wrote to the energy minster recently and got a
long, complicated response, blaming this all on
Europe and it being a difficult situation. I replied,
noting that as we are coming out of Europe then
surely this would simplify matters and allow some
changes for the near future. Sadly, no response.
We also used to charge 5% VAT on listed buildings
(up to 2012). Listed buildings are by their very
nature our most precious assets and require
greater levels of repair, care, and cost. We have
about 500,000 in the UK. So, should we not give
our owners of these buildings a reduced level
of taxation to allow greater investment in our
heritage? If we do not look after them, they will
decay.
I would advocate zero VAT on grade 1 listing and a
5% levy on grade 2* and grade 2.
The examples I have given are all areas where I
believe that a reduced rate of VAT could kickstart
investment in different sectors of the construction
industry. I recognise that central government will
be under pressure to raise revenues, but some
targeted reductions can encourage growth and
activity at a time when we really need it.
I am not an economist or a politician, but I do
understand the wider pressures of today’s society
here in the North East and further afield, when
often the simplest changes can be the most
effective.
The construction industry has the capacity to help
the wider economy quickly, so give the industry the
opportunity to make a difference.
