Where you provide construction services relating to buildings, you may be able to charge the 5% reduced VAT rate, instead of the standard rate, if you the property meets a number of conditions.
Reduced rate
The reduced VAT rate applies to various types of work on residential accommodation including renovation of a property that’s been empty for at least two years. However, there are exceptions which allow you to charge the lower rate even where the property hasn’t been vacant for some or all of that time.
Selling a business
The question of whether a property has been empty is a question of fact. However, some types of occupation are ignored for these purposes:
If the customer you are undertaking the work for has moved into the property already when you start the renovation work, you might still be able to apply the 5% rate if:
Evidence
HMRC might query your application of the 5% rate, so it is a good idea to build up a file of evidence that helped you reach your decision. Evidence could include confirmation from the local authority, correspondence with the owner, or landlord, etc. Use our VAT Reduced Rate Evidence Log to keep the information to hand if HMRC asks questions.