FSB calls for 5% flat tax rate on home renovations

Small building firms: need support says FSB

Lower tax rate to boost building trade

Small firms in the construction sector are calling for a lower VAT rate on home renovations.

Builders are currently struggling against a backdrop of badly decreasing trade, according to a new survey by the Federation of Small Businesses (FSB).

The survey of FSB members in the construction sector, showed that 59% said their trade had decreased in the last six months. And that 37% were concerned their financial prospects for the future were poor.

The lack of demand in the private and public sector was the key factor identified by 49% of small firms as most negatively affecting their business – and causing the downward spiral in trade.

Small firms have identified the VAT rate on renovating homes – currently 15% – as a concern. It disuades potential customers from hiring their services in new building projects.

The FSB is working with the Federation of Master Builders on a campaign calling for the VAT rate to be lowered to a flat rate of 5%. This should give homeowners the incentive to spend. And give a boost to the builders and small firms in the construction industry at an already difficult time.

Other concerns about the decrease in trade cited in the survey were the cost of resources (9%) and regulatory burden (12%). Some 53% of firms also said more and more companies had started paying them later over the last six months.