Exclusions from the exemption from VAT for land and buildings
Produced in partnership with Martin Scammell
Exclusions from the exemption from VAT for land and buildings

The following Tax guidance note Produced in partnership with Martin Scammell provides comprehensive and up to date legal information covering:

  • Exclusions from the exemption from VAT for land and buildings
  • Why does this matter?
  • Where are the exclusions relevant?
  • What is the purpose of the exclusions?
  • European provisions
  • UK legislation
  • Freehold new buildings and civil engineering works
  • Developmental tenancies
  • Game and fish
  • Hotel and similar accommodation
  • more

This Practice Note is about the exclusions from the VAT exemption for property transactions, and other provisions that interact with them.

The exclusions for parking and storage facilities are fully covered in Practice Notes: VAT treatment of parking facilities and VAT treatment of storage facilities.

Why does this matter?

Most property transactions are only subject to VAT if the seller or landlord has opted to tax (see Practice Note: The option to tax land and buildings). In some cases, however, VAT may be due automatically, whether or not the option has been exercised. It is important to identify these so that VAT can be charged and accounted for, and so that provision is made for it in drafting sales agreements and leases.

Where are the exclusions relevant?

The exclusions only apply if:

  1. the transaction would otherwise fall within the exemption for the grant, assignment or surrender of an interest in, right over or licence to occupy land (see Practice Note: Exemption from VAT for land and buildings), and

  2. the exemption is not overridden anyway by an option to tax, by zero-rating or by treatment as a VAT-free going concern

The exclusions generally mean that the transaction is standard-rated. Occasionally, however, it is still exempt under a separate exemption, such as exist for:

  1. sports facilities

  2. education

  3. fund-raising events

  4. cost-sharing groups, or

  5. supplies