EU Finance Ministers recently agreed to allow all member states to apply a permanent reduced VAT rate of 5 per cent. to a list of labour intensive services, including the “renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied”.
The Government apply reduced VAT rates only where we believe these would provide well-targeted and cost-effective support for its policy objectives, compared with other measures, and we continue to keep the impact of VAT on different types of building work under review.