Spring must be in the air because I’m receiving lots of queries about renovations and conversions. Or maybe it’s the effect of Brexit? Either way things seem busier in the property world at the moment.
2 year and the 10 year unoccupied rules
One of the issues that comes up a lot is the reduced rate for renovations and whether you can claim VAT under the DIY HomeConverters Scheme. Just as a quick reminder, the 5% rate on contractors’ services applies to certain renovations if the property has been unoccupied for at least 2 years.
The DIY HomeConverters Scheme allows private individuals to claim VAT if they’ve converted a non-residential property into a dwelling, OR if the existing dwelling has been unoccupied for at least 10 years.
5% VAT on costs or claim VAT from HMRC
I know that people get the rules confused, often assuming that the same rules apply to VAT on costs and VAT claims from HMRC. So remember the basic rules:
2 year rule for contractors’ services. If you’re a contractor and/or a sub-contractor, you can charge the 5% rate for certain renovations if the property has been empty for at least 2 years. See VAT Notice 708: Buildings and Construction, section 8: http://tinyurl.com/y2226zfo.
10 year unoccupied rule for DIY claims If you’re a private individual and you’ve converted a commercial property into a dwelling or you’ve acquired a dwelling that has been empty for at least 10 years, you can claim VAT on certain costs under the DIY Home Converters Scheme; see VAT Form VAT 431C: http://tinyurl.com/spa37wd.
Either way, make sure you understand the rules before you start spending money – see HMRC’s guidance mentioned above or my books on property available from Amazon or as a pdf from our shop. Better to know in advance so yo.u can budget properly.
Marie
February, 2020