From 1 October 2012, owners of protected properties (including listed properties) will see their annual maintenance and alteration costs increase by 20 per cent due to a new VAT rule announced by the Chancellor in March’s Budget. However a zero per cent tax rate still applies to work completed before this date.
The new rule states that:
“Any supplies of building materials or construction services supplied in the course of an approved alteration to a protected building made on or after 1 October 2012 will be subject to VAT at the standard VAT of 20%.”
Previously any work undertaken by owners of protected or listed properties paid no VAT at all - drastically reducing their overall bill.
According to Westbury Windows &Joinery, this change could mean that essential renovation is delayed, not undertaken at all or that substandard products may be used. Westbury Windows & Joinery believes that owners of protected buildings use this VAT exception to make restoration more affordable, thus ensuring these often fragile historic properties do not fall in to a state of disrepair.
Jonathan Hey, managing director, Westbury Windows & Joinery said: “Owning a protected property is usually a labour of love and an expensive one at that. The VAT relief went some way in compensating the owners for maintaining our heritage and also enabled them to future proof the properties for the next generation.
“This seemingly minor change to the VAT rules, will have a huge impact on the owners of protected properties, particularly as household budgets continue to be squeezed. Therefore anyone contemplating making significant changes, alternations or extension work to their protected property should definitely consider progressing with the work as soon as possible in order to avoid paying the extra 20 per cent.”
Pre-payments not permitted. According to Westbury Windows & Joinery:
• Any signed contract that was in place prior to budget day (21 March 2012) can continue at the zero rate until 20 March 2013.
• A zero VAT rate will also apply to any contracts completed between now and 1 October 2012.
• Pre-payments before 1 October 2012 for work to be completed after this date are not permitted.