GGF renews fight for glazing VAT cut
9th February 2016
The GGF has again called on the Government to reduce VAT to 5% for energy-saving windows and doors.
The plea follows six weeks of consultation with members and other trade bodies in response to HMRC’s Consultation paper ‘Changes to the Reduced Rate of VAT on Energy Saving Materials’.
Such a move would not only bring windows and doors in line with a whole list of products on the existing 5% list, says the organisation, but could also boost the entire sector by up to 20% after years of decline, according to members’ estimates.
The Federation also urged the Government to bring its reduced rates in line with a European Directive which permits member countries to reduce rates for ‘provision, construction, renovation and alteration of housing as part of a social policy’.
GGF Managing Director Giles Willson, said: “Replacement windows and doors have not previously been included within the reduced VAT rate despite being vital energy saving products which could legitimately qualify under the criteria described in the European Directive. It is time for the UK Government to comply with EU legislation and to appreciate the importance of energy efficient glazing in the broad economic, social and environmental context.”
The GGF’s response is the latest step in its five-year ‘Cut the VAT’ campaign to have windows and doors recognised as a vital element of domestic energy saving and therefore deserving of the same VAT reduction
Willson backs the organisation’s case with a number of compelling facts and statistics:
• Provision for a whole house approach to energy saving materials being used to make properties energy efficient.
• The primary reason for replacing windows and doors is now for improving energy efficiency (43% - source Palmer Research Report 2014).
• The GGF Membership estimates a growth of 20% in the sector if 5% VAT is awarded. This would be a significant boost to a sector which has been steadily declining since 2002.
To support the response, the GGF provided an estimate of the financial impact to the Treasury if windows and doors were to be included in the reduced VAT category and drew comparisons with the increase in other areas of taxable revenue. It also cited projected market statistics from the Palmer Research Report and highlighted the popularity of the Green Deal pilot which showed that 85% of over 2000 homeowners sampled in 2012 wanted energy efficient glazing.
The organisation has offered to work with Government to develop suitable guidance and training for the industry sector to implement the change within the short timescale and to avoid any confusion in a sometimes complex supply chain should the VAT rate be reduced to 5%.
Giles Willson concluded, “We have collaborated for the last six weeks with our Members, other industry bodies and GK Strategy our political advisors before submitting this response. Our messages are clear and we are willing to meet with officials from HMRC to help them plan a smooth implementation of our proposals should they be included in the policy changes.”
The outcome of the consultation and any changes to the Government’s VAT policy are likely to be released in the summer with any changes being included in the Finance Act in Autumn 2016. Meanwhile the GGF will continue to work with Members, other construction industry trade bodies and Government departments to try and enforce change.