5% VAT On Refurb Costs – On Empty Properties

Chris Street

13th August 2013

Posted by Simon Misiewicz on 10th August 2013

Are you carrying out refurbishment works on your investment properties?

Are you paying more tax than you should be?

HMRC Reference: Notice 708 – Section 7 (4)

There are many property investors / landlords that are simply paying more VAT than they need to. Equally trades people are submitting quotes that are being rejected because they are too expensive.

Why is this the case?

Simply put many people do not actually realise that there are different VAT schemes that allow trades people to reduce their VAT on sales invoices. As such they can therefore reduce their overall costs and win more business. Equally, property investors and landlords can reduce their refurbishment and development costs. This is a classic legal win / win for both parties. The VAT on certain projects can be reduced from 20% to just 5% (1) (3).

Please make sure that any materials are supplied by the trades people / companies. If you buy materials yourself, then you are liable to pay the full 20% VAT rate on purchase (1) (2) (3).

What items of expenditure are at 5% and standard rates (20%)? (4)

You can also use reduce-rate works within the immediate site of the premises being converted that are in connection with the:

  • means of providing water, power, heat or access;
  • means of providing drainage or security; or
  • provision of means of waste disposal. All other services are standard-rated. For example, you must standard-rate for:
  • the installation of goods that are not building materials, such as carpets and fitted bedroom furniture;
  • the erection and dismantling of scaffolding;
  • the hire of goods;
  • landscaping; and
  • the provision of professional services, such as those provided by architects, surveyors, consultants and supervisors.

How do I demonstrate that I can use the 5% VAT scheme?

If the property has been left empty for the past two years then you may need proof from the Local Authority.

We are property developers and investors as well as being accountants.

We therefore know how to reduce our own costs.

So, if you call Simon this month only and quote “VAT Breaks” he will show you how to reduce your costs too.

For more information please contact us on 0115 946 1991 or Click Here To Email

(1) Tax Essentials For Advisors

(2) Conversion, Renovation & VAT

(3 & 4) HMRC – Buildings and Construction – Notice 708

Book a call to see how we can help you.