§ Lord Kennetasked Her Majesty's Government:
Whether it was in the first place an error that alterations to listed buildings were exempted from value added tax rating, while repairs and maintenance of listed buildings were not exempted; and if so, when will this error be corrected.
§ Lord Mackay of ArdbrecknishThe repair and maintenance of all buildings has been standard rated since the inception of VAT, although alterations were initially zero-rated. The Budget of 1984 introduced standard rating for works of alteration to all existing buildings but it was conceded during the debate that approved alterations to listed buildings would be allowed to retain the existing zero rate.
§ Lord Kennetasked Her Majesty's Government:
Whether they consider that the 17.5 per cent. rating for value added tax for repairs and maintenance to listed buildings is conducive to their conservation.
§ Lord Mackay of ArdbrecknishThe purpose of taxation is to raise revenue. The Government prefer to target direct support by making available substantial funds for the repair of historic buildings through English Heritage and others.
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§ Lord Kennetasked Her Majesty's Government:
Whether they consider that the zero rating for value added tax of alterations to listed buildings is conducive to their conservation.
§ Lord Mackay of ArdbrecknishThere can be some value in zero-rating alterations to listed buildings since it may help in retaining or regenerating their useful economic life.
§ Lord Kennetasked Her Majesty's Government:
Why new buildings and new construction, including alterations to listed buildings, are zero rated for value added tax.
§ Lord Mackay of ArdbrecknishAs the recent White Paper on housing makes clear, the Government's policy is to encourage home ownership. Zero rating the costs of constructing new homes allows builders to sell at a lower price. Buildings for commercial and industrial use are taxed at the standard rate.
VAT zero-rating for all alteration work to existing buildings was abolished in 1984 as a revenue raising measure. However, the Government accepted the case for retaining the existing zero rating for alterations to listed buildings as a means of continuing their useful life.