MPs demand single new building tax rate

Labour backbenchers have ganged up on chancellor Gordon Brown to demand a new single rate of VAT to apply to new building and refurbishment, which will replace existing tax incentives to demolish or build on greenfield sites.

A motion signed earlier this week by five MPs led by Blackpool South's Gordon Marsden attacked the present 17.5% on conversion and repair work compared with zero-rated new construction.

The MPs came out against extending zero rating but urged the government to apply a reduced rate below 10% to all building work, including the conversion, refurbishment and repair of historic buildings and places of worship.