Value Added Tax

Renovations and alterations ― reduced-rating works on empty homes

Produced by Tolley
  • 19 Oct 2021 11:27

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Renovations and alterations ― reduced-rating works on empty homes
  • When can renovation works be reduced-rated?
  • What are ‘qualifying residential premises’?
  • What is a single household dwelling?
  • What is a multiple occupancy dwelling?
  • What is a relevant residential purpose?
  • What are ‘qualifying services’?
  • How is the two-year rule determined?
  • What is the special rule for single household dwellings?
  • What kind of proof needs to be kept to show the property was empty?
  • More...

Renovations and alterations ― reduced-rating works on empty homes

This guidance note explains when certain renovation works on ‘empty’ residential properties can qualify for the reduced rate of VAT.

For an overview of the liability of construction services more broadly, see the Overview ― construction, conversion and renovation guidance note.

In-depth commentary on legislation and case law relating to reduced-rated renovations is contained in De Voil Indirect Tax Service V4.413.

When can renovation works be reduced-rated?

It is possible to reduced-rate renovation services when the following conditions are satisfied:

  1. the premises being renovated or altered are ‘qualifying residential premises’

  2. the services are ‘qualifying services’

  3. the premises have not been lived in for at least two years

  4. if appropriate, a valid certificate is held

  5. if appropriate, planning consent / building control approval has been obtained

VATA 1994, Sch 7A, Group 7; Notice 708, para 8.1.2

These conditions are explored further in this guidance note.

What are ‘qualifying residential premises’?

Qualifying residential premises include the following:

  1. a single household dwelling

  2. a multiple occupancy dwelling

  3. a building (or part of a building) that was used for a relevant residential purpose when last lived in, and will be used solely for that purpose once the work has been completed

  4. a building (or part of a building) that was one of a number of buildings that were together used for relevant residential purposes when last lived in, and will be used solely for that purpose once the work has been completed

VATA 1994, Sch 7A, Group 7, Notes 2, 4A

What is a single household dwelling?

For the meaning of a single household dwelling, see the Buildings and construction ― definition of single and multiple household dwellings guidance note.

What is a multiple occupancy dwelling?

For the meaning of a multiple occupancy dwelling, see the Buildings and construction ― definition of single and multiple household dwellings guidance note.

What is a relevant residential purpose?

For the meaning of a relevant residential purpose, see the Buildings and construction ― definition of relevant residential purpose

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