When VAT was introduced in 1973, zero-rating applied to the construction and alteration of all buildings. The repair and maintenance of buildings has, however, always been standard-rated. Due to difficulties in administering the borderline between ‘repairs’ and ‘alterations’, the zero rate for alterations was largely withdrawn in 1984 by the then Government, although the zero rate for work carried out in the course of an approved alteration to a listed building was retained.
Under agreements with our European partners we can keep our existing zero rates of VAT but we are not able to extend them or introduce any new ones. The VAT treatment of repairs and approved alterations to listed buildings could therefore only be levelled if the Government were to withdraw the existing zero rate for approved alterations. The Government have no plans to do so.