Each year the Chancellor of the Exchequer makes the Budget statement to the House of Commons. This outlines the state of the economy and the Government’s proposals for changes to taxation.
This year’s Budget comes at a tumultuous time, after a year of lockdowns and national struggle, as well as the end of the Brexit transition period. While it is true that UK builders have proved themselves to be resilient and adaptable, 2020 was not without its challenges.
The Government must use the Budget to inject confidence into the market by supporting the country’s smallest construction firms and their clients.
The Government must scrap reverse charge VAT to avoid harming the industry’s smallest businesses and reversing the recovery that is beginning to be made. Due to come into force on 1 March, this policy will apply to standard and reduced-rate VAT services supplied by individuals and businesses registered for VAT and within the Construction Industry Scheme. In changing the point at which VAT is charged, it will hit cashflow for the smallest firms.
The timing could not be worse for local builders, so the FMB has joined forces with other leading trade bodies to collectively argue for reverse charge VAT to be withdrawn.
Boosting the market
The FMB has been lobbying the Government to cut VAT on home improvement works for many years. Now that the UK has left the EU, the Government is able to set its own tax agenda and should use the Budget to make this change.
Cutting VAT would give households the boost they need to get building work done, and make their homes fit for the ‘new normal’ and better for the environment.
Reversing the decline in small to medium-sized (SME) house builders
The Government will not meet its target of building 300,000 new homes a year in England without a stronger and more active SME house building sector.
Extending the Stamp Duty Land Tax holiday for a further three months will help keep the housing market moving. This will ensure that all completions that are due to take place before 31 March 2021 can do so.
Investing in local authority planning departments so that they have the resources they need to make faster decisions on small sites would also boost starts on sites and protect jobs.
Building back greener in the year of COP 26
As the UK will be hosting the United Nations Climate Change Conference in Glasgow this year (known as COP 26), it is important that we become a global leader in the low carbon economy. Investing in an ambitious programme of domestic energy efficiency upgrades will help show that the UK is paving the way for change, while also creating the jobs and training opportunities that are desperately needed.
Without strong Government leadership and a long-term plan, in the form of a National Retrofit Strategy, the market will not successfully reach the Government’s carbon emission targets.
Local builders sit at the heart of this Government’s vision for unleashing Britain’s potential, but they need greater support to fully recover from the impact of the coronavirus pandemic. The FMB is representing your views to Government, contact [email protected] for more information.