Why the UK’s listed buildings need a tax break

The UK’s 370,000 listed buildings make a huge contribution to our culture and economy. International visitors consistently say that our historic houses and castles are one of the most important reasons for choosing to come here for a holiday. Historic buildings also play a key role in supporting the creative industries, helping to spread the benefits of our world-leading film industry, for example, across the country.
Looking after this heritage can be a big — and expensive — challenge, though. Maintenance of listed buildings require specialist craftspeople, techniques and materials. Even a like-for-like replacement, which doesn’t usually require listed building consent, is much more costly than for most normal houses. As the majority are in private ownership, their upkeep is funded almost entirely by the individuals who enjoy and care about the heritage they live in.
Historic Houses is the membership organisation for independently owned heritage. It represents about 1,450 grade I and II* historic houses, castles and gardens — from world-famous sites like Castle Howard in North Yorkshire and Chatsworth House (where even the cost of erecting scaffolding might give you a minor heart attack) in Derbyshire to individual private homes.
When we surveyed our members in 2022, they reported that in spite of spending over £156 million a year in total on repairs and maintenance (an average of £99,000 for each property), the cost of their estimated backlog of repairs and maintenance was more than £2 billion. This had grown from £1.3 billion in 2019: nearly half of those surveyed reported delaying or cancelling repairs and maintenance projects during the pandemic as commercial revenue dried up overnight, dramatically reducing cash flow and the ability to embark on significant capital works.
Independent owners have long relied on a supportive fiscal and regulatory framework to help them to maximise the broader benefits of the nation’s privately owned heritage. Together, our members support some 32,000 jobs and add more than £1 billion a year to the UK economy. They also provide genuine pleasure and enjoyment, contributing directly or indirectly to the welfare of millions of people.
But they are not miracle workers. Regular repairs and maintenance are costly at the best of times, and the triple whack of the pandemic, rampant inflation — especially for construction labour and materials — and our fast-changing climate have significantly worsened the challenges the heritage sector was already facing.
Until 2012 listed buildings benefited from a special VAT quirk: approved alterations. Changes that had received listed building consent were zero-rated. The heritage sector had long campaigned that repairs and maintenance — which are much more important — should also be zero-rated. Instead the Treasury simply removed the VAT relief on approved alterations. Many readers will know that demolition and residential new-builds still enjoy zero-rating. With few exceptions there is no such favourable treatment for the repair, maintenance or retrofitting of existing buildings.
We think that now is the time to revisit the VAT question for repairs on listed buildings. The chancellor, Rachel Reeves, continually tells us that there is no money, but growth does not happen without investment. Proposing a VAT cut might seem counterintuitive, but tourism and the creative industries are some of the UK’s fastest-growing sectors and supporting them will pay dividends.
We also need to recognise that the UK’s heritage is a key part of its soft power. Blenheim Palace was the backdrop to the European Political Community summit in mid-July. Targeted support helps heritage to stay open to public access; it will grow not just our economy but also our global cultural standing.
A more supportive VAT regime for repairs and maintenance would provide a real incentive for owners and custodians to undertake much-needed repairs and maintenance projects, and to start tackling the huge backlog of works that threaten the fabric of our nation’s heritage.
Sarah Roller is the policy and education manager at Historic Houses