Chancellor removes VAT concession

Following the budget last week we now have further detail regarding the removal of the zero VAT rate for approved alterations to listed buildings. Always regarded as something of an anomaly (why were repairs and restoration Vatable and extensions not?) this ‘loophole’ has now been removed. However there is a legal obligation on owners of listed buildings to keep their properties in good repair. For this reason we support English Heritage’s campaign for the VAT regulations to be amended to reduce the VAT rate on repair and maintenance of listed buildings.

Further detail on the VAT changes applicable to listed buildings:

1. If the building contract was signed before the 21st March then this provides for a period of one year to complete the build project after which the standard rate will apply to the outstanding works. This is applicable to all listed buildings from 21st March 2012.

2. If the works have not started then only works carried out before 1st October 2012 are zero rated. This is applicable to all listed buildings.

3. Anti-avoidance measures have been put in place, such that if someone invoices work in September (no VAT), but carries out the work after 1 October, the work will be liable to 20% VAT and HMRC will be able to charge 20% on that work.  This would also apply if someone simply placed a deposit prior to October for work carried out afterwards.

Works unaffected that still qualify for the 5% VAT rate:

1. Empty property relief (property empty for 2 years prior to work starting). Applies also to listed buildings.

2. Converting a property from two dwellings into one, or vice versa. Applies also to listed buildings.

3. Converting from commercial use to residential use. Applies also to listed buildings.

4. Also unaffected will be ‘Self build’ claims. (VAT refund scheme for properties empty for 10 years  or more, or subject to a commercial to residential conversion.)