Construction services taxed at VAT zero or 5% rate 28/07/2022
Whilst most businesses in the UK charge VAT at the standard rate of 20%, there are a number of different VAT rates and exemptions that businesses should be aware of. In the UK, there are three separate VAT rates, the standard rate @ 20%, reduced rate @ 5% and the zero rate @ 0%.
HMRC has published an updated version of their guidance titled VAT rates on different goods and services. The guidance provides a list of goods and services showing which rates of VAT apply and which items are exempt or outside the scope of VAT.
The guidance lists the following construction services which can be taxed at the zero or 5% rate.
Taxed at the zero rate:
Substantial reconstructions to protected buildings that are buildings used as a dwelling, for a relevant residential purpose or for a relevant charitable purpose
The installation of a bathroom or lavatory, constructing ramps and widening doorways or passageways for disabled people in their own home
Construction and first freehold or long leasehold sale of a new building for a relevant charitable purpose
Construction and first freehold or long leasehold sale of a new building for relevant residential purposes
Construction and first freehold or long leasehold sale of new domestic buildings
First freehold or long leasehold sale of a commercial building converted into a dwelling or dwellings
First freehold or long leasehold sale of buildings converted for relevant residential purposes
First freehold or long leasehold sale of buildings converted for relevant charitable purposes
Taxed at the reduced rate of 5%:
Converting existing premises by increasing the number of dwellings within the building
Renovating a dwelling that has been empty for at least 2 years
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