House Renovation - VAT 0% or 5% reduced rate?

[Mjt119]

Hello,

 

We bought a property back in March 2021, which had a lot of work to do to it, as highlighted in the survey we got during the purchase.

 

Over the last year we have been carrying out work to the front of the property, but the rear of the property we have recently appointing a building contractor due to the nature of the work (demolishing the entire back of the house, dig out, new footings and rebuild.

 

The building contract we have appoint are VAT registered and therefore charging 20% on all invoices. They mentioned to us about looking into whether we may qualify for either 0% or reduced rate. 

 

Although we purchased the house in March 2021 it has been inhabited since May 2020. The building contractor began work on the property in June 2021, so wondering whether it would qualify under the basis of the two year inhabited period.

 

There is no roof on the house, no kitchen, bathrooms etc, it is completely unliveable, so wondering whether that may have an impact as well?

[jayc89]

Only some work is covered, the property can't have been lived in for 2 years or more BEFORE you purchased it and the work has to have started within a year of you purchasing it.

Full details here: https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#para8-3-4

[Bozza]

Yeah the VAT scheme is really designed to bring uninhabitable/unoccupied property back to a habitable state, as opposed to refurb costs. There are some council tax rebates available though if you weren’t already aware.