FMB Scotland is pressing the Chancellor to overhaul VAT on home improvements ahead of next week's Budget, warning that homeowners are postponing £876 million of work each year because they cannot find a builder they trust.

The total reflects Scotland's share of £11.2 billion of delayed projects across the UK, according to research by the FMB and the HomeOwners Alliance, which found that one in five homeowners has delayed works in the past five years due to difficulties finding a trusted or quality builder.

As VAT is set at Westminster, any Budget decisions will directly affect Scottish households. Domestic electricity has been VAT-free since 1 October, but most labour for general home improvements still attracts 20% VAT. Some energy efficiency installations are currently zero-rated, although this relief is due to end in March next year.

Mark Macdonald, Director of O'Mac Construction in Stornoway on the Isle of Lewis, said: "Eight out of ten tender returns are coming in above budget and end up shelved or redesigned. That wastes a massive amount of resources and frustrates everyone involved. On community-led projects, where funding is tight, VAT is a constant battle, and removing it would help some of those projects move forward."

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The FMB says the Chancellor has an opportunity to simplify and extend VAT relief beyond energy-efficiency measures. It notes that green upgrades are often bundled with general renovations, creating complex invoices as builders try to separate VAT-exempt and standard-rated elements.

Gordon Nelson, FMB Scotland Director, said: "Homeowners across Scotland want to make their homes warmer, safer and fit for the future, but too many are being held back. Nearly £900 million of work a year is not happening in Scotland because people cannot find a builder they trust.

"Our tax system should encourage, not discourage, investment in energy efficiency. Reforming and simplifying VAT relief for housing improvement work will stimulate demand across all four nations of the UK. As we argue in our Builders' Manifesto for Scotland, and with the Chancellor promising to shift spending to the nations and regions, funding should be targeted at helping employers recruit and train apprentices. We look forward to the Scottish Budget in December, where we expect more detail on how the Apprenticeship Accelerator Grant will help local builders train the next generation of Master Builders."

VAT reform is one of five measures the FMB wants in the Budget. The others are:

- A UK-wide network of Build Academies and administrative support for small firms taking on apprentices

- Faster planning processes for small house builders

- Development finance that smaller house builders can readily access

- Funding to introduce mandatory licensing of domestic building companies