Listed Building Alterations
In an unexpected move to plug so-called VAT loopholes and inconsistencies, the Chancellor has announced that alterations to listed buildings will no longer be zero-rated for VAT. Previously, any work that required Listed Building Consent was then zero-rated. The new arrangements will come into force in October 2012 so there is likely to be a flurry of work in the sector to beat the deadline.
For most people concerned with the nation's heritage buildings, the anomaly previously was that repairs to listed buildings were subject to VAT whereas alterations which would normally involve tinkering with the historic fabric of the buildling would receive tax relief. Nevertheless there will be many listed buildings where the alterations might be necessary to bring the building into economic use: so this new measure has the potental to threaten the retrurn to use of empty listed bulidings and cannot be welcomed by the empty homes sector.
Flat Conversion Allowances
The Chancellor has also confirmed the abolition of Flat Conversion Allowances in April 2013. This move had already been announced in the 2011 Budget so is no surprise. it will now be included in the 2012 Finance Bill.
It was disappointing that this generous tax measure was not successful in mobilising a more focused response to the opportunities presented by redundant upper floors. its apparent lack of success was documented by government research conducted in 2006. Perhaps the critieria could have been relaxed to include a wider range of buildings or situations where the ground floor too was redundant.
It was also disappoinitng that those non-charitable housing associations that pay Corporation Tax did not seize on this measure to reduce their tax liability whilst generating more housing.
It's not too late too benefit from Flat Conversion Allowances given that the measure will not be abolished until 2013.