Can we get reduced vat of 5% as the property has been empty for 2 years?

[Bounce]

Hi

 

We are currently going to be renovating the property to make it liveable again.

 

Our builder will be doing the extension works. 

 

We are going to get our own kitchens and bathrooms. The builder can fit it for us, but we need to supply everything, or I can get the kitchen company to fit it. 

 

I was wondering, would I be able to get the 5% reduced vat rate, if I order the kitchen from my chosen supplier if I provide them with some proof showing the property has been empty for 2 years or more. 

[nod]

I’m not sure if your entitled to reduced vat But suppliers won’t do reduce vat unless also fitting 

 

[Bounce]

It would be worth us paying the kitchen company to fit it, as there would still be a saving if pay the reduced vat. 

 

Is there any information online that we could read about this? Anything I've seen, it's very vague. 

 

[Nickfromwales]

  On 05/02/2025 at 19:58, Bounce said:

It would be worth us paying the kitchen company to fit it, as there would still be a saving if pay the reduced vat. 

 

Is there any information online that we could read about this? Anything I've seen, it's very vague. 

 

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You could give Andrew Jones aka “The VAT man” a call and get some actual, dedicated advice about this. Best to find out everything you can claim etc in case random info on the net falls short and you miss out?

 

Plus he’s Welsh so must be good 🤷‍♂️😀. lol. Mention my name and the forum and he’ll look after you 👍. 

[joth]

  On 05/02/2025 at 19:58, Bounce said:

It would be worth us paying the kitchen company to fit it, as there would still be a saving if pay the reduced vat. 

 

Is there any information online that we could read about this? Anything I've seen, it's very vague. 

 

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The 5% rate is only eligible for a single builder that is bringing a property back to liveable condition, and applied to all their supply and labour (including subcontractors) but not other supply or labour that was not paid via the main builder. 

 

Has you principal contractor already agreed to 5% rate it? It's entirely their call if they will, and they will need to be satisfied all the criteria are  met (mostly  proof of continuous vacancy right up to the day they take control of site). Any queries should go to them. It doesn't really matter what the 'VAT man' says, if your builder won't reduce rate it, you're stuck

 

There's no option to claim back VAT from HMRC either for private material purchases or if the builder charges full rate. 

Edited February 6 by joth

[Nickfromwales]

Or you get another builder. 
 

Purpose of a VAT man (a qualified VAT advisor) is to give you advice covered by a professional indemnity, which you can reply on, vs random info on an internet forum which is essentially worth its weight in sausage meat. .

 

With such a potential cash saving I’d not want it left to chance or for there to be even 1% ambiguity.

[joth]

The liability lies firmly with the builder - hence why they're generally very reluctant to reduce rate it. The builder absolutely should be getting professional input on this if not 100% confident.

 

 

However, if you're making major decisions prior to engaging the builder (e.g. "should I buy the property" or "should I temporarily move in") then yes you do need a good understanding of the rules. Hence my question of "do you already have confirmation the builder will reduce rate it".

- If you have a builder, and they said (in writing, in a signed contract) they will reduce rate it, you're golden: even if HMRC chases them for mis rating it, it will be them hit (but of course they will come after you if you mislead them to fraudulently reduce the rate).

- If you haven't yet engaged a builder then definitely seek other advice if you can't work it out for yourself.

FWIW I actually found the guidance easy enough to follow, it's all here https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#section8 (e.g. section 13.2  and it's clear that yes kitchens - excluding appliances - are considered building materials ordinarily incorporated in the building, and hence can be reduced rate, with caveat it must be delivered under that single principle contract)

 

I totally agree with the "don't just trust some random dude on the internet" sentiment, but end of day that can be applied to literally every word ever posted on this forum. Read everything here with a caveat emptor

 

[Ahad]

  On 06/02/2025 at 12:35, joth said:

The 5% rate is only eligible for a single builder that is bringing a property back to liveable condition, and applied to all their supply and labour (including subcontractors) but not other supply or labour that was not paid via the main builder. 

 

Has you principal contractor already agreed to 5% rate it? It's entirely their call if they will, and they will need to be satisfied all the criteria are  met (mostly  proof of continuous vacancy right up to the day they take control of site). Any queries should go to them. It doesn't really matter what the 'VAT man' says, if your builder won't reduce rate it, you're stuck

 

There's no option to claim back VAT from HMRC either for private material purchases or if the builder charges full rate. 

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Can you provide a link to the guidance about only applying to a single builder please?

 

Our builder is happy to deliver at 5% VAT but I’ve also spoken to a glazing supplier who will charge at 5% if we engage them directly. 

[RobertG]

I've also been looking at this VAT discount but wasn't sure of the qualifying criteria. My main concern was a paragraph on the HRMC site that stated that to qualify for the reduced rate the property had to be vacant for the two years prior to purchase. This would (if correct) exclude me as my property was bought a year ago although I don't intend to have the builder start until after the two year period has passed. 

 

8.3.4 People living in the premises whilst you carry out the work

There are 2 empty house rules for situations when people are living in the premises while refurbishment work is being carried out. The first relates to all qualifying premises (read paragraph 8.2).The second only relates to ‘single household dwellings’.

First rule

If the ‘qualifying residential premises’ have not been lived in during the 2 years immediately before your work starts, all of your work is reduced-rated. This is the case even if the premises start to be lived in again while you are carrying out your work. The occupier must move in on a day after you start your work.

But if, when your work starts, the premises are already being lived in, or have been lived in during the previous 2 years, all of your work is standard-rated.

Second rule

You can reduce rate your services of the refurbishment or alterations to a ‘single household dwelling’ where all the following conditions are met:

1. The 2 years immediately before the occupier acquired the dwelling it had not been lived in.
2. No renovation or alteration had been carried out in the 2 years before the occupier acquired the dwelling (you can ignore minor works that were necessary to keep the dwelling dry and secure).
3. Your services are supplied to the occupier ― so if you are a subcontractor you must standard rate your work.
4. Your services take place within 1 year of the occupier acquiring the dwelling.

This exception to occupation will not apply to the renovation or alteration of multiple occupancy dwellings or buildings intended for use for a relevant residential purpose.

 

 

Suffice to say, it's all a little confusing - i.e. Does the second rule come into play in my situation? 

 

Any light thrown on this would be most helpful. Thanks.

 

RobertG