VAT
VAT Discounts
Long term sustainable housing by bringing empty properties back into use is at the centre of Empty Homes’ mission. Currently, there are some VAT discounts available which can be utilised by those who renovate empty properties. It is important to be aware of these discounts before you start work, as it is difficult to reclaim overpaid VAT
2-Year Discount If you are bringing an empty dwelling back into use that has been empty for two years immediately before you start work, will be used only for residential purposes after the completion of the renovations, and you are using builders to complete these works, then you may be eligible for a reduced rate of VAT (currently 5%) on the works of repair maintenance or improvement. The detailed requirements and eligibility for this concession can be found in HMRC Notice 708. You will need to ensure that your builders understand the reduced VAT rate rules so that they invoice you correctly.
10- Year Discount If you are bringing an empty dwelling back into use that has been empty for more than ten years immediately before the start of the works, and will be used for residential purposes by you or your family after the works are completed, you may be eligible for zero rated VAT. This concession is included within the scheme for conversions by DIY housebuilders, and the detailed requirements and eligibility can be found in HMRC notice 431C. If you are completing the building work yourself, there is no reduced rate VAT available. The recommended approach to achieving the 0% VAT where you are eligible is to ensure first that your builder applies the 5% VAT rate to the works which qualify under the 2-year rule, and then you complete the Conversion Claim Form in HMRC Notice 431C to recover the 5% you have paid plus any other VAT you have incurred on qualifying expenditure.
Builders may not be aware of the concessionary VAT rates and discounts for residential properties being brought back into use. It is important to ensure that your project qualifies under the rules which are set out in the HMRC’s full guidance on VAT for building and construction in HMRC notice 708, and / or HMRC notice 431C and that you can provide all the information and paperwork required. The best evidence to give HMRC to support your claim that the property has been empty for at least 2 or 10 years is a written statement from your local council’s Empty Property Officer.
Continuing VAT Campaign
Empty Homes has been a proactive member in the Cut the VAT Coalition, which is working towards greater reductions in VAT rates for those bringing empty properties back into use. Ultimately Empty Homes is working towards the goal of harmonising VAT between new build and refurbishment to establish a level playing field. The Government needs to work harder to join-up its regeneration and fiscal policies. Encouraging 60% development on brown field sites runs contrary to the current VAT regime, which favours new build. This policy is not sustainable in the long-term.
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Cut The VAT
Empty Homes fully supports the Cut the VAT Campaign, which argues that VAT on all home repair, maintenance and improvement work should be reduced from 20% to 5%. Independent research shows that this particular change to VAT rates would bring about a number of significant advantages, which include stimulating economic growth, creating tens of thousands of jobs, improving the UK’s housing stock, encouraging spending on energy efficient home improvements and a dramatic reduction in the competitive advantage of cowboy builders. Information about how you can get involved in the campaign is available on the Cut the VAT website. Please visit the website to sign the online petition and find out more about how you can help us to make an impact. You can also like the campaign on Facebook and share the information with your followers on Twitter.
Empty Homes believes that reducing VAT from 17.5% to 5% for all maintenance and home improvement work would help the Government achieve its target of cutting carbon emissions by 60% by 2050.
It would also benefit millions of UK homeowners by getting rid of cowboy builders, helping those who cannot afford vital repairs to their homes, bringing our empty properties back into use and protecting the countryside.
The benefits in reducing VAT that will accrue for both society and business are many and varied and include at least nine convincing reasons to get VAT reduced.
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