EU approves 5% VAT on home improvements

The UK is to be given the option to charge VAT on home maintenance and repairs at a reduced rate of 5%, after a ruling by European Union finance chiefs. The ruling paves the way for the UK government to ease the tax burden on a construction industry badly hit by the recession – allowing architects, builders and surveyors to carry out private refurbishments for a cheaper rate. Yesterday’s decision by the EU Economic and Financial Affairs Council to allow member states to lower VAT on renovation and repair of private dwellings from 17.5% to 5% comes after months of campaigning by trade bodies and MPs.