VAT Residential Conversions   

VAT Residential Conversations

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There is scope to obtain VAT relief on certain qualifying conversions to residential property.  A reduced VAT rate of 5% applies to two types of conversion works, under either the “empty homes” or “changed number of dwellings” rules. The 5% also applies to the supply of building materials supplied/installed by the building contractor.  The relief applies to individuals and businesses.  

Residential properties which have been empty for at least two years can benefit from the 5% VAT rate, subject to certain conditions being met. Alternatively, conversions which involve converting commercial property into residential use, changing a single home into a number of flats or vice versa may also qualify for 5% VAT, again subject to certain conditions being met. There are also certain exclusions from the 5% rate e.g. design  fees, although there is a way to mitigate this. White goods and furniture are also charged at 20%. 

In our experience, many building contractors default to the 20% VAT rate unless their customers advise otherwise and provide the necessary evidence. VAT should be discussed at the contract negotiation stage. 

We can assist clients by reviewing their plans, planning permission and schedule of works to confirm the correct VAT rate which should be applied. 

If you need advice on this area, please get in touch with Xeinadin’s Indirect Tax team below.

This article is for information only and specific advice should always be taken. 

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