Question to the HM Treasury:
To ask Her Majesty's Government what assessment they have made of the improvement in energy efficiency of homes that could be achieved if the current rate of VAT on retrofit building work were to be reduced to (1) a five per cent rate, and (2) a zero rate; and what plans they have, if any, to do so.
A reduced rate of VAT at 5 per cent is already maintained for some residential renovations, including those that increase the number of dwellings or renovating properties that have been empty for two years or more, subject to certain conditions.
Expanding the reliefs that are already available would come at a cost to the Exchequer. Expanding this reduced rate to include all renovations and repairs is estimated to cost the Exchequer at least £3.75 billion a year.
While all taxes are kept under review, the Government has no current plans to review the VAT treatment of retrofit building work.