30 June 2014

Rural property news -summer: VAT on listed buildings

Listed building VAT relief for residential property was abolished in 2012.  At Withers we have taken some soundings concerning any changes in the behaviour of residential property owners arising from the removal of VAT relief on approved alterations.  We have asked whether this has caused more or less to be spent on repairs, and whether the extra cost of maintaining a historic dwelling has caused people to choose newer buildings which, whilst lacking a certain charm, may be more functional if only by reference to reduced ‘red tape' and associated costs.

We have found that, as yet, little provable impact has arisen from these changes.  This may be because it is simply too early for people to feel the impact directly.  Anyone who had made a listed building consent application prior to the trigger date of 21 March 2012 will, in any case, be covered by the old relief until the end of September 2015.  For those who ‘missed the boat' the extra costs they have incurred may yet have an impact on such things as the budget left over for repair, and in any case they may have committed themselves to a plan of works prior to the announcement that the VAT relief would be unavailable.

For these reasons we are still keeping a watching brief over this area.  To a great extent there is little that can be done.  The abandonment of the zero rate for listed building alterations was a ‘one-way street' since, under EU law, the zero rate cannot be reinstated.  That could be affected by any renegotiation of the terms of the UK's membership of the EU, but despite recent political comment to the effect that control over our VAT rates would be a major plank of renegotiation, it is little short of inconceivable that our European partners would allow us to reinstate zero rates which have only been held over since the 1970s under ‘transitional provisions'.

Of course, if the UK should decide to leave the EU entirely, then our VAT rates become entirely a matter for our own government.

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