Pre-budget wish list makes fresh calls for VAT discount
Housing associations have renewed calls on the government to address ‘unfair’ tax rules that cost the sector more than £200 million a year.
The National Housing Federation has handed Chancellor Gordon Brown a wish list in its annual pre-budget submission, including slashing the rate of value added tax payable by housing associations on repairs and maintenance from 17.5 to 5 per cent.
The concession would bring associations more in line with councils, which pay tax on maintenance but are able to fully reclaim the money.
The submission also called on Mr Brown to do away with VAT payable on certain types of demolition work and to provide relief on capital gains tax payable on shared ownership schemes.
The government has turned down the request to cut VAT on repairs in previous submissions, but changes to European tax law could pave the way for a change in the rules, the federation said.
Under EU rules, member states cannot introduce any new zero VAT ratings, but Bob Wilson, head of finance policy at the federation, said European law would now allow reductions in the tax.
‘The government can no longer hide behind Europe and say Europe will not allow us to do it because they can,’ he said.