Is a live-work unit a dwelling for VAT purposes?

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Published on LexisPSL on 23/05/2018

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • Is a live-work unit a dwelling for VAT purposes?

A live-work unit is a single residential unit (eg a studio or loft) that includes a work area, such as a home office, so that the occupant can work from home. The inclusion of the work area may be a requirement of planning consent. This Q&A assumes that the unit is in the UK.

For VAT purposes the question is whether the unit is ‘designed as a dwelling’. If it consists partly of a dwelling or dwellings, and partly of something else, then there will need to be an apportionment: only the relevant part is treated as a dwelling.

HMRC considers live-work units at paragraph 16.4 of VAT Notice 708 (buildings and construction). This states that if there is no planning requirement for a specific area or percentage to be used as a workspace, the whole unit can be treated as a dwelling. On

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