According to reports recently released by the Scottish Building Federation some special new schemes could mean that VAT on home improvement items (and services) is cut down to just 5%. The Chancellor of the Exchequer, Alistair Darling, has been offered several similar schemes in the pre-budget period which will end on the 22nd of April and the Scottish Building Federation believe that by reducing VAT on home improvements, an 80% financial boost could help save the struggling industry.

Fears are rife that if something isn’t done soon about decreased interest in the UK and Scottish home improvement industry, increasing numbers of businesses will be forced to close and job losses will increase chaotically. It’s also believed by many experts that by lowering VAT on DIY and home improvement products and services, the Chancellor could help to protect business and jobs which might be lost otherwise.

The projected figures for the number of Scottish homes which could benefit from the VAT cut are in the region of 70,000 and this could be an even higher number if more home owners are enticed to carry out work now, rather than waiting until later due to the drop in tax. In terms of helping the UK Home Improvement industry further, it is hoped that after the initial Scottish tax cuts, VAT cuts in the United Kingdom would follow suit and it is predicted that these tax drops would have a profound effect for small to medium home improvement businesses.

One expert writing for the Financial Advice website commented on the schemes, saying that: “One potential by-product of a reduction in VAT for home improvements would also be the undermining of the current pricing advantage which “cowboy builders” have over law-abiding, taxpaying businesses.” They added: “In theory this potential scheme could well be a win-win situation for all involved.”

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