Finance: Tax debate about listed buildings

The Government is facing calls to change VAT rules on listed buildings that could be costing some smaller charities as much as a fifth of their income.

Heritage Link, which represents and campaigns on behalf of about 80 heritage groups in the UK, is proposing that all charities that own listed buildings should be able to reclaim VAT charged on repairs to the premises.

"VAT is charged at 17.5 per cent on repairs to listed buildings, but it isn't charged at all on new buildings," said Kate Pugh, secretary at Heritage Link. "This distorts market forces in favour of new structures.

"We would like the Chancellor to introduce a flat VAT rate for everyone.

In the meantime, however, we are working towards a conclusion that would allow tax on repairs to listed buildings to be refunded."

Under current legislation, charities that are registered for VAT are able to reclaim tax levied on the cost of repair work. But many smaller charities, such as village trusts, are not registered and so cannot claim VAT back.

"Seventeen and a half per cent is an enormous amount - it's almost a fifth," said Pugh. "This affects small local groups that are having to raise an awful lot of money on their own."

KEY POINTS

- Heritage Link is a lobbying body that represents about 80 national heritage bodies in the UK

- Members include the National Trust, the Civic Trust, the Council for British Archaeology, the Campaign to Protect Rural England and the Society for the Protection of Ancient Buildings

- Only charities that are registered for VAT can reclaim the tax charged on repairs to listed buildings

- Heritage Link would like to hear from any charities that have been affected by the tax on repairs.

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