Government Under Pressure to Cut VAT on Retrofits

The government needs to reduce its 20% VAT rate on retrofitting old homes, according to the chief executive of Historic England. 

Duncan Wilson was speaking at the Architects Journal’s AJ100 breakfast event, where he questioned retrofitting being taxed at 20% while VAT on new build projects is 0%.

“We have been speaking to the government for quite a long time [about] changing the VAT regime,” said Wilson. “That is something we need all to keep battering away at, because it is somewhat crazy to have 0% on new build and 20% on repair, refurbishment and maintenance.”

Retrofitting a home helps to improve its energy efficiency by adding new technology or features. This process differs from renovating a house or conducting home improvements to make a home more aesthetic. 

Wilson’s comments follow an industry-wide push to amend the policy. Green Alliance published a report last week stating the government should cut VAT on retrofits, the Federation of Master Builders (FMB) wants VAT to be reduced to a maximum limit of 5-10%, and the Royal Institute of Chartered Surveyors urged the government earlier this month to reduce VAT to 5%. 

The Importance of Retrofitting

Wilson said that around 21% of UK homes are more than 100 years old, and retrofitting homes built before 1990 could be particularly important because these homes have been reported to be four times more likely to require repairs.

He also argued that refurbishing ageing homes to increase their energy efficiency was key to tackling climate change – making your home eco-friendly means you will pump less harmful carbon dioxide emissions into the atmosphere – and meeting the government’s net zero carbon economy by 2050.

However, Wilson acknowledged that planning rules may have to be altered to ensure retrofitting measures successfully enable energy efficiency. 

“There may be planning rules that will get in the way of making buildings significantly more energy-efficient – such as on glazing or curtilage. We are going to have to be more flexible and consider greater degrees of alteration than we previously have,” he said.

How to Make Your Home Energy Efficient

One of the main benefits of retrofitting for homeowners is that it can help to reduce energy bills. And you can retrofit your home in a variety of ways. 

Installing insulation and upgrading your boiler to improve your home’s energy rating can increase its value by £25,000. Even quick jobs such as replacing your light bulbs with energy-efficient light bulbs can make a difference. 

Insulating your loft and cavity wall can also help to keep heat in, and both external and internal wall insulation could save up to £455 on annual heating bills (according to the Energy Saving Trust).