VAT savings for renovations

Hillier Hopkins LLP

Chartered Accountants & Tax Advisers

Call +44(0)330 024 3200 and discover how we can help you.

If work is carried out to an existing building VAT is usually chargeable at the standard rate (20%). However, some taxpayers may be eligible to be charged at the reduced rate (5%) if renovating or altering an eligible dwelling that has not been lived in during the 2 years immediately before the work starts.

Evidence may be required to show that the building has not been lived in during the 2 years immediately before work starts. Proof can be obtained from:

  • Electoral Roll
  • Council Tax records
  • Utilities companies
  • Empty Property Officers in local authorities
  • Any other source that can be considered reliable

The following occupation can be ignored:

  • Illegal occupation by squatters
  • Occupation by ‘guardians’
  • Non-residential use, such as storage for a business

Each purchase should be considered on its own merits before the reduced rating can be applied.

This lesser-known rule can provide significant cashflow savings and save a taxpayer up to 15% on the cost of a renovation.

If VAT has been charged incorrectly it can only be recovered from the supplier which may be difficult to achieve after the event. This will be extremely important if VAT cannot be recovered on the development and the overcharged 15% becomes a cost component.

VAT can be a complex area. Everyone’s situation is different and getting advice that is tailored to your unique situation can ensure that your affairs are as efficient as possible. We offer a free initial consultation, so if you would like to speak to Natasha Heron , please get in touch with her on +44(0)330 024 3200 or email hi@hhllp.co.uk.

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Natasha Heron

Natasha is a member of the ICAEW as a qualified auditor and the Chartered Institute of Taxation, specialising in indirect taxes. Natasha has developed a specialism as an adviser on the Stamp Duty Land Tax implications of property transactions.

Contact Natasha at Natasha.Heron@hhllp.co.uk or on 01923 634460