V4.411 Residential conversions
In Budget 2001 a number of measures to help regenerate Britain's towns and cities including a cut in the rate of VAT to 5% to encourage renovation and conversion of existing property. This measure was introduced by FA 2001, s 97(1)1 in relation to relevant supplies made on or after 12 May 2001.
Further measures were announced in the 2002 Budget which extended the scope of the provisions to the conversion, and the renovation and alteration, of buildings other than dwellings2. For renovations and alterations, see V4.413.
The following3 are liable to the reduced rate of VAT at 5%4:
• the supply, in the course of a 'qualifying conversion', of 'qualifying services' related to the conversion
• the supply of building materials if:
– the materials are supplied by a person who, in the course of a qualifying conversion, is supplying qualifying services related to the conversion, and
– those services include the incorporation of the materials in the building concerned or its immediate site
It should be noted that certain supplies of services qualifying for the reduced rate of VAT are affected by domestic reverse charge provisions with effect from 1 October 2019. For details of these provisions, see V3.234.
Meaning of building materials for the purposes of reduced-rated conversions
'Building materials' have the same meaning in the context of the reduced-rating as that given in VATA 1994, Sch 8, Group 5, Notes 22 and 235 in relation to the zero-rating of certain construction works. For details, see V4.242.
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