Can you zero the VAT for New Builds?

IMPORTANT:

Please check with the VAT office as from time to time, these information is subject to change.

VAT For New Builds – Zero Rated

The VAT for new builds can be zeroed for domestic new build properties.

The rules imply that goods can be zero rated for goods that have been supplied and installed.

As an example, if we supply and install an oak conservatory, this would be zero rated.

Note the words ‘and install’; if we supply the same conservatory on a supply only basis, we need to charge the full VAT amount. This can then be claimed back after your project is completed.

We would require some sort of proof that your project was a new build, for example, approved planning permission, consent or a letter from your architect.

Barn Conversions – Sometimes 5%

This subject is a little more tricky and is taken from VAT Notice 708.

VAT can be zeroed as per a new build if the barn conversion used to be a building.

A building is a construction that has not been lived in for more than 10 years. This is completely different to a dwelling; somewhere someone would actually live.

So, if you are converting a ‘building’ into a ‘dwelling’ and it has been vacant for more than 10 years, we would charge 5% VAT for all supply and installation projects. Note that this 5% can be reclaimed at the end of the project.

If the project is converting an already established ‘building’ into what we like to call a ‘barn conversion’, we must charge the standard rate of VAT. VAT for new builds can be misleading, and we strongly suggest reading Notice 708.

Listed Buildings

Taken from Historic England’s Website

As from the 1st October 2012, VAT at the standard rate (20%) applies to all materials and services supplied in the course of approved alterations to listed buildings or scheduled monuments.

Previously, the cost of approved alterations was zero rated for VAT. There are transitional provisions providing relief from the effects of the change in some circumstances up to the 30th September 2015.

VAT paid on the repair and maintenance of listed places of worship and on the construction, maintenance, and renovation of certain types of memorials can attract a grant up to the value of the tax paid under the memorials grant scheme funded by the Department for Digital, Culture, Media and Sport.

The disposal of a protected building after it has been substantially reconstructed is zero rated.

Private treaty sales to some museums and heritage bodies are free of VAT and do not include VAT for new builds.

Conservation Areas

As far as we are aware, VAT for new builds that are in a conservation area or area of outstanding natural beauty (AONB) do not qualify for any reductions in the VAT rate if you are completing work.

On a side note, you will need to consult the local conservation officer.

General Extensions and Information

Regardless of whether we are supplying your goods on a supply only basis or supply and install, the standard rate of VAT will be charged.

Should you qualify for any of the above where the VAT for new builds is covered, we would require a copy of either the planning permission granted or an architect’s letter confirming the project.

Another important reminder is to ensure you file your VAT claim within three months of your completion date. As you can only do this once, we would suggest including all VAT receipts and claiming what you feel is right. HMRC will reply to you explaining what, if anything, is wrong in terms of the incorrect rate charged, or you may be claiming for something that is not claimable.

As an example, you could claim for fixed wardrobes, i.e., built-in and non removable, but you cannot claim for wardrobes that are freestanding.

If you require any advice on ‘VAT for new builds’, the HMRC is very helpful and can advise accordingly.