A petition from Molly Scott Cato – the Green Party’s finance spokesperson – on the Downing Street website calls on the government to remove VAT on refurbishment projects and raise VAT on non-Passivhaus new-build construction to 20 per cent, with more than 2000 signatories to date, and closing on 8 August.
…0% rate VAT on refurbishment….5% if the build meets minimum passive house…
… construction industry produces 40% of our total emissions…
Petitioner Molly Scott Cato writes:
To create a tax incentive to favour retrofit instead of demolition and new build.
To 0% rate VAT on refurbishment projects total costs if they substantially reduce CO2e emission of the building; impose a 20% VAT for new build schemes, reduced to 5% if the build meets minimum passive house standard; to 0% rate VAT for all items on a regularly updated list of energy-saving products.
Since Brexit, UK has total freedom to use a differential VAT regime to address the climate emergency.
UK construction industry produces 40% of our total emissions; initial embodied carbon can account for 75% of lifetime emissions. Retrofitting is carbon-efficient but the current VAT regime privileges new build over refurbishment.
The government could also incentivize retrofit by removing the liability for VAT from all energy-efficiency products and simplify the processing for claiming back.