The UK Government could come under pressure from the European Commission following the EC's proposal to reduce the vat on all construction and repair of housing to 5%.
The proposal will go down well with the ECA and the wider construction industry, which has long campaigned for a reduction in the current 17·5% rate of vat on domestic repair, maintenance and improvement work. Lobby groups say lowering vat would level the playing field in the domestic market and stimulate work in the sector.

The EC proposal is part of a wider review of European vat regulations, with the aim of harmonising national systems. Already 12 member states apply reduced rates to the construction and repair of social housing.

A study carried out by Capital Economics for the Construction Products Association also supports the case for reducing vat to 5% on all domestic repair and maintenance work.

The Association has already discussed the findings with the Treasury and construction minister Nigel Griffiths, and will be using the report to support its submission to the Chancellor in advance of his pre-budget report later this year.

Source

Electrical and Mechanical Contractor