Conservatory Tax Cut Will Help Scots Growth
According to an article in Scotland, slashing VAT on home improvements should help homeowners in their DIY plans for the future.
Chancellor George Osbourne is being urged by SNP and Labour MSP’s to cut the VAT on building extensions, conservatories and household repairs to 5%, down from the recent 20%, which could mean that a home improvement costing £5,000, would be £750 cheaper.
The article states that with this VAT cut, you could save a potential £2,250 off a garage conversion, £6,000 on a two-story extension, £1,500 off the cost of a conservatory and £750 off a new roof for a small terraced house.
Hopefully with these reductions, not only will it bring a much needed boost to the DIY retailers but for the industry too. According to the Scottish Retail Consortium, the building trade has been hit badly due to the economic downturn.
There is a strong possibility that reducing the VAT to 5% could deliver a huge boost to the industry and tempt more customers across the country, who are considering extending the household, rather than moving to a new one.
Michael Levack, who is the Scottish Building Federation’s Chief Executive said “It would give many building employers the confidence they need to be able to recruit and retain more apprentices.
What’s more, evidence from the Isle of Man which already has the 5% VAT rate, and have so for many years, shows that the spending stimulus it provides actually boosts the overall level of tax income from these works.”
A survey was conducted 2 years ago to which the SBF found 50% of those asked, said that if the VAT was reduced to 5% then they would spend more on home improvements.
Scottish Retail Consortium Director, Ian Shearer said “There is no doubt that the non food retail scene is particularly suffering at the moment with the economic downturn relative to the food sector.
In terms of big ticket items like DIY and home wares, these retailers have felt the downturn particularly acutely.”
First Minister Alex Salmond has already signalled his support for the ‘conservatory tax cut’ back in August, to which he said “There may be a case for cutting VAT in certain sectors like home improvements. That would be an excellent initiative to cut VAT there to give a boost in that particular sector.”
His comments were backed by buisness leader Colin Borland, of the Federation of Small Businesses who said “There are a great number of people who are not moving house and instead thinking about working on their property. If we cut VAT to 5%, it then becomes more practical.
If you’re lucky enough to have money in the bank, it’s not making much difference, given the low rate of interest. You are investing that money in the value of your home.”
As the eurozone crisis continues to hit the economy hard, Mr Osbourne is facing pressure to create a mixture of extra spending and tax cuts in hope to help boost growth.
Unfortunately UK ministers said they could not deviate from their deficit-reduction course during a time where bond markets were punishing indebted countries across the world with higher borrowing costs. So my guess is that this 5% VAT cut will not be coming into England any time soon, especially to Anglian Home Improvements, which is a shame as I believe that this would be a brilliant proposal for our industry in such a dire time.
Last night, the Shadow Scottish secretary Margaret Curran said ” The government must pay attention to the concerns raised about the construction industry in Scotland, where 10,000 jobs have been lost in just 3 months and where the number of Scottish compaines facing bankruptcy has risen by 135% in just 2 years.”
She carried on to say “The government must support Labour’s call, and that of the Scottish Building Federation, for a one year cut in VAT on home improvements.”
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And the government will listen to anything that will actually help the construction industry?
I’m not holding my breath!