Did you know that you may be eligible for reduced VAT...?
If you have a property that needs renovation or conversion, you may well be eligible for the Government reduced VAT rules, so why no take advantage now!
VAT - residential properties empty for at least two years
The renovation of residential properties that have been empty for at least 2 years will be eligible for a reduced rate of VAT of 5%. This applies to labour and materials associated with repairs, alterations, construction of associated garages and hard landscaping.
To minimise VAT paid, careful consideration needs to be given to who supplies materials and it will usually pay to work with a VAT-registered builder, as the saving of 15% on materials supplied and fixed (labour and materials) will usually outweigh the saving of 20% VAT on just the labour. There is no equivalent reduced VAT rate for DIY work HMRC notice 708
VAT - residential properties empty longer than 10 years
The renovation of a dwelling that has been empty for ten years or more is treated as a new dwelling created by conversion and assuming the property is to be sold, a VAT registered builder must charge a zero rate of VAT on all eligible work.
If the property is to be used for residential purposes by you or your family after the works are completed, you may be eligible to a zero rate of VAT. This concession is included within the scheme for conversions by DIY house builders, and the detailed requirements and eligibility can be found in HMRC notice 431C
VAT - Converting a non –residential building into a dwelling
The rules for first time conversions of non –residential buildings are the same as for dwellings that have been empty for ten years or more. This applies to barn conversions, church conversions, school conversions, warehouse/office conversions HMRC notice 708
VAT - Converting Residential Property ( Change in numbers )
Certain types of conversions which create an increase or reduction in the number of single household dwellings can benefit from building contractors charging a reduced VAT rate of 5%.
This relates to the following work of transforming a property
- Splitting a house into several self contained flats
- Changing the number of self contained flats in a building which already contains flats
- Converting a commercial building so that it contains one or more self contained flats
- Converting a block of flats back into a single house
As with a dwelling empty for two years or more, there is no equivalent reduced VAT rate for DIY work.
For further VAT information visit www.hmrc.gov.uk and look for the following notices, self builders VAT431B , convertors VAT431C, renovators of properties empty for two or more years or energy efficiency works VAT Notice 708.
For advice on any values or more tips, please contact Oakwood homes on 03300 577654 - we'd love to help.