To ask Her Majesty's Government whether they will reduce the rate of value added tax on repairs to buildings and charge a similar rate of value added tax on new constructions. [HL573]

VAT is a broad-based tax upon consumption, which operates within a framework of rules, which are agreed by unanimity within the European Union. This framework does not permit reduced rates of VAT to be charged for the repair or construction of all types of buildings.

At the March 2009 Ecofin EU Finance Ministers agreed that all Member States should be allowed the choice to introduce a reduced VAT rate for the,

“renovation and repairing of private dwellings, excluding materials which account for a significant part of the value of the service supplied”.

However, equalising the VAT rate for all domestic new build work would require us to permanently give up the current zero rates and the Government have no plans to do so.

The Government continue to keep the impact of VAT on all building work under review.