A tax on heritage attacks the heart of local business

THE decision to withdraw VAT relief from approved alterations to listed buildings may not just change the face of Britain by sounding the death knell for hundreds of cherished buildings, but also damage local economies and community services.

Listed buildings – only three per cent of all buildings – are protected as the best surviving examples of our rich architectural tapestry. They’re valuable for the unique beauty they bring to streetscapes, and their economic contribution is significant. Every pound invested in the historic environment directly contributes, on average, an additional £1.60 to the economy over ten years. Local construction firms and architects often rely on heritage building projects to support their businesses. The tourism sector, driven by our heritage, is Britain’s third largest export earner, worth around £115bn a year and supports around 2.6m jobs. With such an obvious connection between the historic environment, local communities and economic prosperity, it is puzzling that the government has failed to make the connection between the maintenance of the historic environment and its own growth and civil society policies.

Rather than curtailing an anomaly that allows wealthy owners to avoid tax on alterations to their listed homes, this tax will hit the greater majority of modest owners and community groups, working hard to reuse listed buildings. An estimated 35,000 to 50,000 listed buildings are owned by businesses or charities. With many unable to reclaim the VAT incurred in making alterations, the heritage tax will add an extra 20 per cent to the cost of keeping these buildings going.

This extra burden will likely lead to the mothballing of many building projects. A typical community project at risk is a town hall renovation in the Shropshire market town of Bishop’s Castle. Project manager Sam Hine warns, “We’ve already been seeking to raise tens of thousands through local fundraising and donations. To now go back for twenty per cent more is demoralising and will put our project in jeopardy.”

It will be cheaper to demolish a listed building and rebuild anew (at 0 per cent VAT), than renovate the existing building at 20 per cent VAT. This runs contrary to so many government initiatives, from the Big Society to the Asset Transfer agenda. If government is serious about supporting economic growth and cutting carbon it should focus on measures to encourage people to reuse existing buildings. With this ill-considered proposal, a golden opportunity to rationalise VAT in a way that would have benefitted jobs, the economy and the environment has been missed. We are left with a regime that penalises sympathetic, low-carbon, often community-led building projects. I hope government will reconsider this tax on our heritage.

Loyd Grossman is chairman of The Heritage Alliance.