VAT rise increases incentive for new build vs restoration

[AMc]

Ok then, no vat on restoration but 20% on new builds. I can't see why not.

Because the construction industry is a major employer and a 20% increase in the cost of new construction would cause massive unemployment. Despite our population growth being quite slow we're living in smaller households and actually need more homes. It's worth noting that conversions are usually rated at 5%.

It would make some sense and encourage better work to remove the VAT liability on labour for repairs & renovation making it cheaper to employ skilled workers to do good work. That would also encourage a more honest building labour market with fewer incentives for cash in hand working.

IMHO all permanent work on listed buildings (repair, alteration or restoration) should be 0% VAT rated or 100% VAT reclaimable. I don't want any bloomin' duck houses on a tax break but it's in our national interest to remove a tax burden on protecting our heritage

As I have been running my own job on an old, unlisted building and doing my much of my own work I'd like to see building materials and labour 0% VAT rated but I don't see that particular tax cut gaining much momentum.

 

[biffvernon]

we...actually need more

Our per capita carbon emissions are ten times those of the average African. Aren't we clever enough to manage with less?

 

[Flyfisher]

Having different bands of VAT for different goods is fraught with problems and is part of the general inconsistencies withing the tax system. Food for example - I can see AN argument that it should be zero-rated because it's one of life's essentials, but why do I have to pay VAT on my water bill - another of life's essentials? Anyway, isn't the income tax threshold of £6000 (or whatever it is these days) intended to allow for life's essentials before the state takes a cut?

Another example would be travel costs - not all costs but the costs of actually going to work. I'm sure we all know people who pay thousands for train and/or bus season tickets to get them to and from work. This is out of already taxed income with VAT on top! Yet businesses and many self-employed people are able to claim travel costs before tax.

It's all too complicated and inconsistent, but I suspect governments like this complexity because it makes it easier to fiddle here and fiddle there according to their politics.

Of course, with VAT being a very significant amount, rationalising the whole shebang is almost impossible in one go. Imagine the outcry if food was to suddenly increase in price by 17.5%, never mind 20% (and quite rightly so).

I can understand a justification for zero-rating listed building repairs; the government, in it's wisdom, has decided it wants to extert some control over people's private property, in which case it seems fair to give them a measure of compensation for this. But otherwise, I think the VAT system, like the whole tax system, is just riddled with inconsistencies and complexity.

As for jumbo jets, I've flown one in a simulator. Rather easier, I found, (once you get your head around all the instruments) than my few solo flights in a real light aircraft.

 

[Horace]

FF I agree with much of what you say but, as regards the self employed and travel costs, the rule is the same for the employed or self employed where normal commuting is concerned. Ie you can't get a tax deduction for costs of getting to your normal place of work. However, both employed and self employed cna claim the costs of journeys from their normal place of work to a temporary place of work (ie a builder to a site, a computer consultant to a client's offices etc).

What they should rationalise is employees'/ self employed NIC and income tax. Having the distinction is a joke and causes no end of confusion and cost. However, governments like the the distinction becuase they can claim they haven't put up tax (cf Gordon Brown). I am sure the Tories will also exploit this confusion at some point. The self employed pay 8.5% NIC which entitles them to absolutely nothing in terms of pension or benefits. It is a pure tax.

 

[AMc]

...actually need more

Our per capita carbon emissions are ten times those of the average African. Aren't we clever enough to manage with less?

The average African isn't choosing a low impact lifestyle, its a quirk of fate that they are born into states with lower levels of industrialisation and urbanisation. Given the choice the developing world is busily ramping up consumption to the same levels as the small minority in the developed world (e.g. India & China)

You could take the argument that as new builds have to meet a higher standard for thermal performance then VAT is already being used as an incentive to build a housing fleet with lower carbon emissions - over the lifetime of the building the carbon cost of the building should be offset by its lower running cost. The "Merton rule" for larger developments is also encouraging green energy generation which can't be enforced on a private renovator. I wouldn't argue it's perfect but it is in play.

There is already a 5% VAT encouragement to convert premises to residential use.
There are also VAT reductions to bring derelict residential buildings back into use.
There is 5% VAT rate for changing the number of dwellings which (generally) is used to turn large single household dwellings into multiple dwellings.
All of which use the VAT system as a way of rewarding turning unoccupied premises into habitable dwellings.
The elephant in the room is the 0% rating on new builds which is grossly unfair and distorts the housing market.

It would seem logical and fair to drop VAT on everything or given the current 'austerity' we're being told is suddenly necessary perhaps it could all be balanced out at 5%?

 

[Flyfisher]

as regards the self employed and travel costs, the rule is the same for the employed or self employed where normal commuting is concerned. Ie you can't get a tax deduction for costs of getting to your normal place of work.

You're certainly right that it all hinges on "your normal place of work" and the taxman will argue very strongly that this is wherever it will negate any claim for travel allowances (remember, a tax inspector's job is not to be fair, it's to maximise revenue!).

I was once "caught out" on this. I was a full-time employee but had an employment contract that stated my home address was my normal base of work, because I travelled so much and, when in the UK, spent more time working from home than anywhere else. We had a sales office about 20 miles from my home that I would visit about once a week and we had the main company office 80 miles away that I visited once per month when meeting with our accountant to close the monthly books. For that day I would claim 160 miles car allowance. This arrangement had been in place for about three years.

Following a tax audit, the taxman decided this was not an allowable expense because the main office was 'my normal place of work' as I was the MD ! I won't bore you with all the letters and meetings that ensued but I lost the point - mainly because we decided not to pursue a formal complaint because of the time and cost. It didn't matter to me personally because the company paid the tax and NI on what was now deemed to be a "benefit in kind", but the whole thing left me rather aggrieved.

So, self-employed or not, beware about the taxman's view of your "normal place of work".

 

[LadyArowana]

If you do get a visit from the VAT inspector just be sure to offer him some yummy Marks and Spencer teacakes......http://business.timesonline.co.uk/tol/business/columnists/article3724508.ece

 

[Flyfisher]

:lol: :lol: :lol:
Now you mention it, I remember that mini-saga. I'd always thought that all food was zero-rated. Interesting that the taxman (well, the government) should use the tax system to encourage us to eat cake rather than biscuits.

I guess it's futile trying to make logical sense of the tax system though.

 

[Schoolmarm]

That's far too sensible for a government.
Now stop trying to avoid thread drift

:lol: :lol: :lol:

 

[robgil]

can someone please tell me why biccies are vat'able and tea cakes are not? no really , i wanna know.

 

[LadyArowana]

can someone please tell me why biccies are vat'able and tea cakes are not? no really , i wanna know.

I don't know the history of why some biscuits were but cakes weren't, it may have something to do with the fact that "bakery products" ( cakes ) were viewed as essentials, whereas "confectionary items" ( some sorts of biscuits ) were not. The whole subject is now incredibly complicated. HMRC has pages of guidance on how you define each, the concept of chocolate covering takes on a level of significance you would never have dreamed possible!

Examples of things that are zero rated:-
Chocolate chip biscuits where the chips are either included in the dough or pressed into the surface before baking
Bourbon and other biscuits where the chocolate or similar product forms a sandwich layer between two biscuit halves and is not continued onto the outer surface
Jaffa cakes
Biscuits coated with caramel or some other product that does not resemble chocolate in taste and appearance

Examples of things that are standard rated:-
All wholly or partly coated biscuits including biscuits decorated in a pattern with chocolate or some similar product
Chocolate shortbread
Gingerbread men decorated with chocolate unless this amounts to no more than a couple of dots for eyes
Ice cream wafers partly covered in chocolate such as “chocolate oysters”

Honestly you couldn't make this stuff up...http://customs.hmrc.gov.uk/channels...document&columns=1&id=HMCE_CL_000118#P67_4124, and that's just the summary there are even more technical papers.

What it really gives us though is a PPUK Top Tip, give you builders Jaffa cakes, or real cake !

 

[FamilyWiggs]

can someone please tell me why biccies are vat'able and tea cakes are not? no really , i wanna know.

Ah Rob - that is one of life's great existential questions. I believe they've also been struggling with it over at the FreemanLeague forum too. 8)

Interestingly, the answer lies in many parallel universes where VAT is applied to all manner of different snack-time edible goods simultaneously. It is our misfortune to exist in the plane where VAT is applied to one and not the other. Console yourself that there is an even greater misfortune befalling a VAT inspector right now in another universe - in that one he is currently featuring as elevensies for a walking talking Tunnocks teacake. :wink:

 

[LadyArowana]

Ah Rob - that is one of life's great existential questions. I believe they've also been struggling with it over at the FreemanLeague forum too. 8)

Don't they bake their own biscuits ? :shock: I am beginning to doubt their credentials as pioneers in self sufficiency :lol:

 

[worms]

one of life's great existential questions.

yummy Marks and Spencer teacakes

The real question is how anyone can consider any other brand of teacakes than Tunnocks :shock:

 

[FamilyWiggs]

Ah Rob - that is one of life's great existential questions. I believe they've also been struggling with it over at the FreemanLeague forum too. 8)

Don't they bake their own biscuits ? :shock: I am beginning to doubt their credentials as pioneers in self sufficiency :lol:

I think they make them out of straw mixed with their own dung. That would certainly be VAT (and fat-) free!

 

[LadyArowana]

I think they make them out of straw mixed with their own dung. That would certainly be VAT (and fat-) free!

They are probably not worried about a few stray bits of e.coli anyway, come to think of it they have more in common with Joce than she thought... ( :lol: I know there's a filter now Joce ! ).

 

[Flyfisher]

Honestly you couldn't make this stuff up . . . [snip]. . . and that's just the summary there are even more technical papers.

Ah, but think of all the employment opportunities it makes for the public sector.

 

[robgil]

FamilyWiggs wrote:
Ah Rob - that is one of life's great existential questions. I believe they've also been struggling with it over at the FreemanLeague forum too.

you know since joining their forum ive had my face book account hacked. i used the same password for both. could just be a coincidence. Last time i tried to sign in facebook had sent me a security pop up message telling me someone tried to sign into it from an irregular server or something like that and i had to change my pass word.i reckon they were using 'hide my ass' or something similar and face book security intercepted them.

 

[Schoolmarm]

one of life's great existential questions.

yummy Marks and Spencer teacakes

The real question is how anyone can consider any other brand of teacakes than Tunnocks :shock:

:shock:

 

[robgil]

i wonder if it is down to dippability? you cannot dip a tea cake but you can dip a biccie , this makes a biccie a necessity because a drinks too wet without one , a tea cake is therefore a luxury , but that's the wrong way around isn't it? this would mean tea cakes should be vat'able.