The government should put a lower tax rate on home renovations to help small business insurance customers in the construction industry, according to the Federation of Small Businesses (FSB).
A new survey from the organisation says a five per cent VAT rate would help stop decreasing trade in the sector, with 59 per cent of construction company owners reporting a drop in business in the last six months.
Some small business insurance customers stated the current 15 per cent rate on renovating homes is preventing potential customers from starting work on their houses.
John Walker, national policy chairman at the FSB, said the reduction to five per cent would offer an incentive for people to add an extension or build a garage.
"[With] more than half of smaller construction firms and builders across the UK warning they will have to lay off staff in coming months, the construction industry needs support today," he added.
Other issues raised by business insurance customers in the survey included late payment from other companies, which more than half of firms said was an issue.
A survey by the Chartered Institute of Building recently highlighted that a skills shortage in the sector may hamper its recovery, with 78 per cent of those questioned saying it will present a problem in the future. 
