-1 Mins
Did you know…
Whilst most construction services incur VAT at 20%, some works qualify for VAT at the reduced rate (5%) to apply. This can provide significant savings to both developers and consumer homeowners/landlords.
NB: Professional fees (e.g., architects, etc) are always subject to 20% VAT.
The reduced rate applies to…
Construction works to the fabric of buildings and related materials for;
- Conversion of commercial property to residential
- Conversions involving a change in the number of dwellings (e.g. large house into flats or vice versa)
- Renovation of dwellings that have been empty for at least 2 years (you’ll need proof for this)
The following pages set out the benefits to developers and occupiers of ensuring contractors only charge the 5% VAT rate – highlighting potential improved investment return or reduced cost.
Example of savings for investors & developers
Example of savings for owners & occupiers
Whilst it’s the contractor who charges the VAT, they often take the cautious approach of adding 20% VAT. It’s therefore important that you ensure that all contractors are aware of the application of the reduced rate.
For developers, it’s often possible to ensure VAT does not become a cost (even at the 5% rate) by ensuring the correct structure is used.
Get in touch
