{"id":3179,"date":"2017-12-11T15:24:19","date_gmt":"2017-12-11T15:24:19","guid":{"rendered":"https:\/\/smh.group\/?p=3179"},"modified":"2023-02-15T13:52:54","modified_gmt":"2023-02-15T13:52:54","slug":"vat-residential-property-projects","status":"publish","type":"post","link":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/","title":{"rendered":"VAT on Residential Property Projects"},"content":{"rendered":"<p><em><strong>\u2018I\u2019m starting a project converting and improving a run-down property for residential letting purposes. My builder says he must charge me 20% VAT as he is VAT registered.\u00a0 Is this correct?\u2019<\/strong><\/em><\/p>\n<p>In some cases your builder would be correct; however in many situations you\u00a0<em>should<\/em>\u00a0actually be charged a reduced rate of VAT, at 5% or even zero%.<\/p>\n<p>Unfortunately, there is a tendency amongst many building contractors to charge the 20% rate regardless, simply because they are not expert in VAT and don\u2019t want to take the chance of getting it wrong.<\/p>\n<p>If you aren\u2019t alert to this possibility you may either pass on the project (and potential profits) or be unable to recover the overpaid VAT (and make less profit).<\/p>\n<p>We therefore recommend that you seek specialist advice when you are next considering a property purchase or development project. \u00a0At the very least, we can help ensure your building contractor doesn\u2019t inadvertently put you off taking on your next potentially lucrative project.<\/p>\n<p>In the meantime, here is a summary of the main issues:<\/p>\n<p>&nbsp;<\/p>\n<p><strong><u>When\u00a0<\/u><\/strong><em><strong><u>should<\/u><\/strong><\/em><strong><u>\u00a0I be charged the reduced 5% rate?<\/u><\/strong><\/p>\n<p>A contractor should charge \u2018Reduced Rate VAT\u2019 in the following scenarios:<\/p>\n<ul>\n<li>Conversion of a non-residential building such as an office or warehouse to a house or flats<\/li>\n<li>Conversion of a house where additional dwellings are created, e.g. one dwelling into 2 flats<\/li>\n<li>Conversion of multiple occupancy dwellings, for example bed-sits converted back into 1 house<\/li>\n<li>For works on a residential property that has been unoccupied for more than 2 years<\/li>\n<\/ul>\n<p>It\u2019s worth noting that this rate will apply to all the \u2018construction services\u2019 provided by the contractor during the development.<\/p>\n<p>Any non-construction services that you contract for directly will still carry standard rate VAT (for example furniture, televisions, architects fees, surveyors etc.)<\/p>\n<p>However, if certain non-construction services are part of the overall service provided by the contractor it may be possible to benefit from the lower rates.<\/p>\n<p>It is therefore essential to plan ahead and seek advice as part of planning any building project.<\/p>\n<p>The savings we can help you make are often significant.<\/p>\n<p>&nbsp;<\/p>\n<p><strong><u>When\u00a0<\/u><\/strong><em><strong><u>shouldn\u2019t<\/u><\/strong><\/em><strong><u>\u00a0I be charged the 5% rate?<\/u><\/strong><\/p>\n<p>Broadly speaking, a contractor shouldn\u2019t use the \u2018Reduced Rate VAT\u2019 in the following scenarios:<\/p>\n<ul>\n<li>On the construction of new residential properties where the zero rate applies<\/li>\n<li>All works to commercial properties (except where listed above)<\/li>\n<li>All other cases where the reduced or zero rates of VAT do not apply<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong><u>What if my scenario isn\u2019t as clear cut?<\/u><\/strong><\/p>\n<p>Naturally, there will be instances where the intended project doesn\u2019t fall completely within the reduced rate category or within the standard rate category; for example:<\/p>\n<ol>\n<li><strong>Q) What if only part of a commercial property is being converted to residential for example?<\/strong><\/li>\n<li>A) HMRC simply ask that items attributable to the residential work are charged at 5% and commercial work at 20%, and for the work done on common parts a reasonable apportionment should be used.<\/li>\n<li><strong>Q) What if 2 semi-detached properties are converted into 1 building which is then to be used as 2 flats?<\/strong><\/li>\n<li>A) In this question, there hasn\u2019t been a \u2018change in the number of dwellings\u2019 and therefore the conversion wouldn\u2019t qualify for the reduced rate.<\/li>\n<\/ol>\n<p>&nbsp;<\/p>\n<p><strong><u>Summary<\/u><\/strong><\/p>\n<p>The residential property market has not been easy over the past few years.\u00a0 Making sure you don\u2019t pay more taxes than you should is not just desirable, it is\u00a0<em>essential\u00a0<\/em>for anyone wishing to make profits.<\/p>\n<p>If you are an individual considering a residential property project, or are a contractor looking to tender for one please get in touch and we will be pleased to advise.<\/p>\n<p>Sutton McGrath Hartley is a multi-disciplinary firm of Accounting &#038; Business Advisory, financial advisers and lawyers offering comprehensive financial expertise for all business, personal and family interests. Our specialist departments can help with VAT and <a href=\"https:\/\/devstagesite.co.uk\/smhgroup\/chartered-tax-advisers\/\">Tax planning<\/a>.\u00a0<strong>To discuss your requirements please contact <\/strong><strong>one of our team on 01142664432 or email jburnett@smh.group<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>\u2018I\u2019m starting a project converting and improving a run-down property for residential letting purposes. My builder says he must charge me 20% VAT as he is VAT registered.\u00a0 Is this correct?\u2019 In some cases your builder would be correct; however in many situations you\u00a0should\u00a0actually be charged a reduced rate of VAT, at 5% or even zero%. Unfortunately, there is a tendency amongst many building contractors to charge the 20% rate regardless, simply because they are not expert in VAT and don\u2019t want to take the chance of getting it wrong. If you aren\u2019t alert to this possibility you may either pass on the project (and potential profits) or be unable to recover the overpaid VAT (and make less profit). We therefore recommend that you seek specialist advice when you are next considering a property purchase or development project. \u00a0At the very least, we can help ensure your building contractor doesn\u2019t inadvertently put you off taking on your next potentially lucrative project. In the meantime, here is a summary of the main issues: &nbsp; When\u00a0should\u00a0I be charged the reduced 5% rate? A contractor should charge \u2018Reduced Rate VAT\u2019 in the following scenarios: Conversion of a non-residential building such as an office [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":15860,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[3,4,16],"tags":[55,69,83,13,25,60,19,61,14,76],"class_list":["post-3179","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-smh-accounting-business-advisory","category-chartered-tax-advisers","category-financial-services","tag-accountants","tag-capital-gains-tax","tag-chartered-accountants","tag-inheritance-tax","tag-property","tag-sutton-mcgrath-hartley","tag-tax","tag-tax-advisers","tag-tax-planning","tag-vat"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>VAT on Residential Property Projects - SMH Group<\/title>\n<meta name=\"description\" content=\"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_GB\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"VAT on Residential Property Projects - SMH Group\" \/>\n<meta property=\"og:description\" content=\"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\" \/>\n<meta property=\"og:site_name\" content=\"SMH Group\" \/>\n<meta property=\"article:published_time\" content=\"2017-12-11T15:24:19+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-02-15T13:52:54+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1980\" \/>\n\t<meta property=\"og:image:height\" content=\"1320\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Brendan Hall\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Brendan Hall\" \/>\n\t<meta name=\"twitter:label2\" content=\"Estimated reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\"},\"author\":{\"name\":\"Brendan Hall\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e\"},\"headline\":\"VAT on Residential Property Projects\",\"datePublished\":\"2017-12-11T15:24:19+00:00\",\"dateModified\":\"2023-02-15T13:52:54+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\"},\"wordCount\":659,\"image\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg\",\"keywords\":[\"accountants\",\"Capital Gains Tax\",\"chartered accountants\",\"Inheritance Tax\",\"property\",\"sutton mcgrath hartley\",\"tax\",\"tax advisers\",\"tax planning\",\"VAT\"],\"articleSection\":[\"SMH Accounting &amp; Business Advisory\",\"SMH Chartered Tax Advisers\",\"SMH Financial Services\"],\"inLanguage\":\"en-GB\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\",\"url\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\",\"name\":\"VAT on Residential Property Projects - SMH Group\",\"isPartOf\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#website\"},\"primaryImageOfPage\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage\"},\"image\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage\"},\"thumbnailUrl\":\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg\",\"datePublished\":\"2017-12-11T15:24:19+00:00\",\"dateModified\":\"2023-02-15T13:52:54+00:00\",\"author\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e\"},\"description\":\"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.\",\"breadcrumb\":{\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#breadcrumb\"},\"inLanguage\":\"en-GB\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/\"]}]},{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage\",\"url\":\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg\",\"contentUrl\":\"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg\",\"width\":1980,\"height\":1320},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/devstagesite.co.uk\/smhgroup\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"VAT on Residential Property Projects\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#website\",\"url\":\"https:\/\/devstagesite.co.uk\/smhgroup\/\",\"name\":\"SMH Group\",\"description\":\"\",\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/devstagesite.co.uk\/smhgroup\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-GB\"},{\"@type\":\"Person\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e\",\"name\":\"Brendan Hall\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-GB\",\"@id\":\"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/fe3e3bb96786e02b14d97d1c006fde60e4080a2841fd919bafa62c4cc1c65688?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/fe3e3bb96786e02b14d97d1c006fde60e4080a2841fd919bafa62c4cc1c65688?s=96&d=mm&r=g\",\"caption\":\"Brendan Hall\"},\"url\":\"https:\/\/devstagesite.co.uk\/smhgroup\/author\/brendan-hall\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"VAT on Residential Property Projects - SMH Group","description":"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.","robots":{"index":"noindex","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"og_locale":"en_GB","og_type":"article","og_title":"VAT on Residential Property Projects - SMH Group","og_description":"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.","og_url":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/","og_site_name":"SMH Group","article_published_time":"2017-12-11T15:24:19+00:00","article_modified_time":"2023-02-15T13:52:54+00:00","og_image":[{"width":1980,"height":1320,"url":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg","type":"image\/jpeg"}],"author":"Brendan Hall","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Brendan Hall","Estimated reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#article","isPartOf":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/"},"author":{"name":"Brendan Hall","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e"},"headline":"VAT on Residential Property Projects","datePublished":"2017-12-11T15:24:19+00:00","dateModified":"2023-02-15T13:52:54+00:00","mainEntityOfPage":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/"},"wordCount":659,"image":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage"},"thumbnailUrl":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg","keywords":["accountants","Capital Gains Tax","chartered accountants","Inheritance Tax","property","sutton mcgrath hartley","tax","tax advisers","tax planning","VAT"],"articleSection":["SMH Accounting &amp; Business Advisory","SMH Chartered Tax Advisers","SMH Financial Services"],"inLanguage":"en-GB"},{"@type":"WebPage","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/","url":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/","name":"VAT on Residential Property Projects - SMH Group","isPartOf":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#website"},"primaryImageOfPage":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage"},"image":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage"},"thumbnailUrl":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg","datePublished":"2017-12-11T15:24:19+00:00","dateModified":"2023-02-15T13:52:54+00:00","author":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e"},"description":"Read our guide to VAT on residential property projects in this blog post. Sutton McGrath Hartley provide independent financial advice in South Yorkshire.","breadcrumb":{"@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#breadcrumb"},"inLanguage":"en-GB","potentialAction":[{"@type":"ReadAction","target":["https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/"]}]},{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#primaryimage","url":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg","contentUrl":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-content\/uploads\/2017\/12\/new-build-1.jpg","width":1980,"height":1320},{"@type":"BreadcrumbList","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/vat-residential-property-projects\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/devstagesite.co.uk\/smhgroup\/"},{"@type":"ListItem","position":2,"name":"VAT on Residential Property Projects"}]},{"@type":"WebSite","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#website","url":"https:\/\/devstagesite.co.uk\/smhgroup\/","name":"SMH Group","description":"","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/devstagesite.co.uk\/smhgroup\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-GB"},{"@type":"Person","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/637129b7464f960037f1b676f625570e","name":"Brendan Hall","image":{"@type":"ImageObject","inLanguage":"en-GB","@id":"https:\/\/devstagesite.co.uk\/smhgroup\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/fe3e3bb96786e02b14d97d1c006fde60e4080a2841fd919bafa62c4cc1c65688?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/fe3e3bb96786e02b14d97d1c006fde60e4080a2841fd919bafa62c4cc1c65688?s=96&d=mm&r=g","caption":"Brendan Hall"},"url":"https:\/\/devstagesite.co.uk\/smhgroup\/author\/brendan-hall\/"}]}},"_links":{"self":[{"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/posts\/3179","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/comments?post=3179"}],"version-history":[{"count":1,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/posts\/3179\/revisions"}],"predecessor-version":[{"id":24393,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/posts\/3179\/revisions\/24393"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/media\/15860"}],"wp:attachment":[{"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/media?parent=3179"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/categories?post=3179"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/devstagesite.co.uk\/smhgroup\/wp-json\/wp\/v2\/tags?post=3179"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}