Guides & Publications28 Jul 2023
Alliotts Focus – Autumn 2023
In the Autumn edition of Alliotts Focus we look at; Keeping on top of scams, Managing Corporation Tax, Rental Market Reforms, and a look at HMRC investigations
Articles
Reduced rate VAT on Refurbishment Costs – could you benefit?
With the rising cost of refurbishment/construction
With the rising cost of refurbishment/construction in prime central London, one area that can help to reduce costs significantly is being able to take advantage of the reduced rate of VAT of 5%.
Projects that may be eligible:
- Converting a property into a different number of single household dwelling e.g. from two flats to one house. This includes conversions of non-residential buildings (such as farm buildings) into dwellings, and changing the number of units in existing residential buildings.
- Renovating an empty house or flat. In this case the property must not have been lived in for two years before work starts. It is possible to also count the time under the previous owner. Under this condition it is important to have proof from records such as Electoral Roll, Council Tax records etc. HMRC ignores certain kinds of occupation, such as squatters, but do not ignore occasional use.
Criteria for Reduced Rate VAT
There are some costs that will not qualify for the reduced rate e.g. fitted bedroom furniture, professional services, landscaping etc. The qualifying services are limited to work on the actual building and work to create access, including access of utilities. However, qualifying work includes improvements, such as extensions, as well as ‘making good’ and decorating.
As with most taxes VAT in this area has many complex rules and is an area that professional specialist advice should be obtained before commencing a project.