VAT Rebate in UK’s Heritage Sector Could Unlock £7M Benefit

CHANGES to the VAT rebate scheme for the heritage sector would safeguard fragile historic attractions, widen public access, and provide an economic boost.

That’s according to Historic Houses, the association representing independently owned historic houses, castles, and gardens. The organisation is urging government to make simple changes to the VAT rebate scheme following new research.

The research says VAT rules are exacerbating a backlog of urgent repairs estimated at £2bn – threatening the fabric of some of the UK’s best-loved buildings.

Ben Cowell, Director General of Historic Houses, said: “The average property surveyed spends around £160,000 on its repairs and maintenance each year, but the investment is diminished in value by around 18% as VAT eats into tight budgets. Given the scale of the preservation task they face, it’s not surprising that owners report that almost all money recouped from the tax (90%) would be ploughed into further much-needed work.”

VAT Rebate

About 80% of Historic Houses properties open to the public are VAT-registered, meaning they can reclaim VAT-able expenditure on buildings that form part of their business operations. This can reduce net VAT payments to somewhere between 2% and 5% for those attractions.

However, not all buildings qualify for VAT reclamation. Those that offer free access to the public are not recognised as ‘business operations’ and cannot therefore reclaim VAT.

These sites include not just independent places represented by Historic Houses, but free attractions in the care of charities like the National Trust, such as Castlefield Viaduct in Manchester, and English Heritage, which includes Ironbridge in Shropshire, and Kenwood House in London.

The Department for Culture, Media and Sport already recognises that VAT can create disincentives for the maintenance of invaluable heritage. This is why it created a multi-million-pound pot for VAT rebate grants to churches under the Listed Places of Worship Scheme (LPOW). The LPOW scheme was recently confirmed for 2025/26, to support the restoration of thousands of listed places of worship.

Historic Houses estimates that extending eligibility for the existing rebate scheme to listed buildings that open to the public for at least 28 days a year would cost not much more than £6m, and yield as much as £5.5m in additional vital repairs and maintenance.

On top of that, additional public access incentivised by this scheme would help rural areas, and boost other taxable activity, potentially netting the Treasury an overall fiscal gain.

Ben said: “This targeted support would allow owners to choose the best contractors for the job, increasing the demand for specialist heritage skills, and it would encourage almost certainly encourage beneficial reinvestment of recovered VAT expenditures into additional repair and maintenance works.”

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