£1bn Vat Bombshell on Building Supplies


£1bn VAT Bombshell on Building Supplies

Legislation & Regulation

The Builders Merchants Federation is warning that its members face a £1bn Brexit bombshell if they are forced to pay 20% VAT upfront on European building materials. Has this been a debate in your business yet, how will this affect your projects' budgets?

The Construction Index has reported about Parliaments vote this week to ban the UK from raising taxes bound for the EU unless the EU also collects tax for the UK. If the UK exits the EU without reciprocal customs arrangements, UK businesses face having to pay 20% more for imports from the EU and will have to do this upfront before goods can leave EU ports. 

Building supplies will be particularly impacted, the BMF says, with a knock on effect on costs of construction and, potentially, the UK housing market. Cashflow, costs and prices will all take a hit, given that the UK is heavily reliant on imports for materials such as timber, bricks and paint. 

 60% of timber used in UK building comes from the EU, mainly Sweden, Finland and Latvia, and the added costs are £1bn.  For bricks, imported mainly from Belgium and Holland, the post Brexit changes would add costs of £160m, while for paint, which comes from across the EU, added costs are estimated to be around £80m. 

BMF chief executive John Newcomb said: “Merchants already face significant cost increases due to rising world prices and currency fluctuations involving Sterling. Paying 20% more due to VAT rules will hit builders’ merchants hard.”


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