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Question – Are my project build costs to be 20% VAT rated?

We advise you to seek your own specialist VAT advice, however here is a ‘heads up’ to some of the main points…

…while the contractor is ultimately responsible for charging VAT where it is due and collecting it, it is the architect who sits down and discusses project costs with the client at the outset.

…new build residential projects – and charitable ones, as long as they do not generate any income – do not attract VAT, whereas refurbishment and repair works do.

…the rules are not entirely straightforward. Regarding what and how the ratings are applied – zero – 5% – 20% on items like Shell+Core, materials, furniture etc…

…new build schemes require two tests – a demolition test and regarding what elements are accepted as zero rated.

…Zero VAT rating is not a presumptive right or indeed blanket rate.

…reduced VAT rates of 5% apply to certain types of work, such as bringing empty properties back into use, converting offices into homes, sub-dividing homes into flats and amalgamating dwellings within a house – it is the change in the number of dwellings that counts, not whether there are more or fewer dwellings.

…extension and enlargement of an existing property is not VAT free.

HMRC offers a free VAT helpline and publishes detailed guidance on VAT for construction work.

https://www.gov.uk/vat-builders

At 7db we are happy to talk through your project and your financial forecasting early in the design process to help you move forward.