How taxman could rake in £2.4billion from crisis

THE taxman could make almost £ .4billion from the building safety scandal – more than the Government has stumped up so far to cover the costs of the crisis.

Leaseholders are being charged VAT on replacing dangerous cladding and adding temporary safety measures because they count as home repairs and improvements.

Ministers have set aside £1.6billion to fund the replacement of unsafe materials, but MPs expect the total cost of fixing potentially perilous buildings to be closer to £15billion.

Homeowners who receive funding will not have to pay VAT, but tens of thousands forced to pay out of their own pocket will be charged at 0 per cent. It means the taxman could make £ . billion from vital repair works. Meanwhile, insurance bills are estimated to have increased by £1.6billion per year for those living in unsafe flats. This is also subject to a 1 per cent insurance premium tax, meaning the Government’s coffers could swell by a further £171million.

It comes as hundreds of thousands could miss out on funding to fix defects due to shortfalls in Government support. Many may be forced into bankruptcy if they are made to pay bills of up to £115,000 each.

The Government fund is limited to replacing dangerous cladding on buildings over 60ft. But hundreds of blocks have been found to have other fire safety defects, while there could be around 17,500 shorter ones that also need repairs.

A Ministry of Housing spokesman said it was ‘considering a range of options’ to fund future repairs.