VAT Rate down for Empty Residential Properties

Reduced Rate of VAT for the Renovation or Alteration of Empty Residential Properties

If you are a VAT registered builder or contractor, and carry out work to an existing building you will normally have to charge VAT at the standard rate. You may, however, be able to charge VAT at the reduced rate of 5 % if you are renovating or altering:

  • a dwelling that has not been lived in during the two years immediately before your work starts or
  • premises intended for use solely for a residential purpose, which have not been lived in during the two years immediately before your work starts.

This could potentially give contractors a competitive edge, when quoting for work.

However beware, there are conditions that need to be met before you can use the reduced-rate for your services.

Your services can be reduced-rated when all of the following conditions are met:

1 You renovate or alter ‘qualifying residential premises’ – basically qualifying residential purposes are a single or multiple occupancy dwelling or a building which, when last lived in, was used for a relevant residential purpose, and after renovation or alteration will be used solely for such a purpose.
2 The premises have not been lived in for two years or more – you can only reduced-rate the renovation or alteration if, in the two years immediately before renovation works start, the residential premises has not been lived in.  If you reduced-rated your supply, you may be required to show that the building has not been lived in during the two years immediately before you start your work. Proof of such can be obtained from Electoral Roll and Council Tax records, utilities companies, Empty Property Officers in local authorities, or any other source that can be considered reliable.
3 Where necessary, you hold a valid certificate – If you hold a letter from an Empty Property Officer certifying that the property has not been lived in for two years, you do not need any other evidence.  Otherwise the customer for the reduced-rated work can issue the certificate.
4 Your services are ‘qualifying services’ – Other than installing goods that are not building materials, you can reduced-rate any works of repair, maintenance (such as redecoration), or improvement (such as the construction of an extension or the installation of double glazing) carried out to the fabric of the dwelling.


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