Commentary

V4.413 Renovation and alteration of dwellings

Part V4 Exemption, zero-rating and reduced rates

V4.413 Renovation and alteration of dwellings

V4.413 Renovation and alteration of dwellings

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.

The following3 are liable to the reduced rate of VAT at 5%4:

  1.  

    •     the supply, in the course of the renovation or alteration (including extension5) of qualifying residential premises, of qualifying services related to the renovation or alteration

  2.  

    •     the supply of building materials if both:

  3.  
    1.  

      –     the materials are supplied by a person who, in the course of the renovation or alteration of qualifying residential premises, is supplying qualifying services related to the renovation or alteration, and

    2.  

      –     those services include the incorporation of the materials in the premises concerned or their immediate site

provided the appropriate 'empty home condition' is satisfied6.

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 qualifying residential premises in the context of reduced-rated renovations

'Qualifying residential premises' means7 either:

  1.  

    •     a single household dwelling

  2.  

    •     a multiple occupancy dwelling

  3.  

    •     a

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