It is pretty widely known that new build houses are zero rated for VAT, but did you know that conversions of existing buildings to dwelling use can be charged at the lower 5% VAT rate?
We attended an excellent VAT seminar presented by chartered accountants Critchleys recently which showed us a number of ways clients can reduce the tax bill on their building projects. We would always recommend specialist professional advice is taken from tax specialist such as those at Chrtichleys in relation to tax matters, although clearly any costs can be readily recouped given such significant savings are available!
There are a number of ways to qualify for the 5% VAT rate on conversions, including:
- An existing non-residential building converted to a single dwelling, a house of multiple occupancy (HMO), or another “relevant dwelling type”
- An existing single house converted to multiple flats, a HMO, or another “relevant dwelling type”
- An empty shell, either dwelling or non-dwelling converted to any “relevant dwelling type”
The 5% rate applies to all materials and labour provided by a contractor, but not to materials bought directly by a client. Also to qualify for these rates, you must have relevant permissions (planning, listed buildings etc.) in place before works start. Thinking Buildings have extensive experience of obtaining permissions for converting existing buildings, often in contentious and sensitive contexts. Talk to us about your project today.