VAT

[bil8999]

Hi

We have a small plot of land which has planning for 4 small detached bungalows, if we build with the intension of renting rather than selling, am I correct in assuming that we will not be allowed to claim back any vat on materials and labour.

Regards 

 

[Richlist]

My understanding is its only self build when it's your principle private residence that allows a reclaim of vat.....but I am not an accountant.

Have you tried a search of the hmrc web site for vat/self build?  

[Melboy]

VAT is only reclaimable on a property you are building for your own occupation but I do believe the rules have altered slightly on that in the past year.

With regards to build to rent then I am almost 100% certain you cannot claim the VAT back but there are other ways of claiming if you become a ltd company but it can be a lot of hassle to do that with corporation tax etc etc.

[bil8999]

2 hours ago, Richlist said:

My understanding is its only self build when it's your principle private residence that allows a reclaim of vat.....but I am not an accountant.

Have you tried a search of the hmrc web site for vat/self build?  

Yes tried that, unfortunately its not very clear, will have to phone VAT office.

You can claim all vat back if selling, but not sure if the intension is to rent, I think as Melboy said  you have to pay the vat.

 

[bil8999]

2 hours ago, Melboy said:

VAT is only reclaimable on a property you are building for your own occupation but I do believe the rules have altered slightly on that in the past year.

With regards to build to rent then I am almost 100% certain you cannot claim the VAT back but there are other ways of claiming if you become a ltd company but it can be a lot of hassle to do that with corporation tax etc etc.

The land is already in ltd company, I am almost sure that if the intension is to rent then you cannot reclaim the vat back, lets hope that has changed, if not I could build in ltd company, claim vat, then sell to my sole trading company.

[Richlist]

Just found something on here..... http://www.buildinglanduk.co.uk/self-build-taxes-htm

'Examples of people who cannot use the vat refund scheme includes........landlords, speculative developers........'

 

 

[bil8999]

1 hour ago, Richlist said:

Just found something on here..... http://www.buildinglanduk.co.uk/self-build-taxes-htm

'Examples of people who cannot use the vat refund scheme includes........landlords, speculative developers........'

 

 

Thanks RL, interesting, will let you know what the vat people tell me on Monday

[Melboy]

I have to say that not being able to claim back the VAT would not put me off from building even now.  

What I would be doing and for me this would be easy, is to get the supplier of the building materials to give you big discounts and they will especially if you are building 3 properties.

[bil8999]

1 hour ago, Melboy said:

I have to say that not being able to claim back the VAT would not put me off from building even now.  

What I would be doing and for me this would be easy, is to get the supplier of the building materials to give you big discounts and they will especially if you are building 3 properties.

Thanks Melboy, we already get the suppliers to discount, but 20% is a huge saving, I am sure there is a legal way round this.

I would prefer to rent out new properties, higher rental return, lower maintenance, design and build to the market you want to attract, in my case mature tenants with disposable income.

 

[Melboy]

I have a very close family friend who I have known for 30 years and he is the manager of a very large national building supply company locally. Needless to say my discounts are, shall we say, very generous.      

[bil8999]

Update

VAT office say that if I build new dwellings with intention to rent then I cannot claim back the vat, but if I get a builder in to supply and build it for me, then he can claim back the vat and zero rate his invoice to me.

So I will own the land and my ltd building company will complete the works and invoice me zero rated, what a farce.

[Melboy]

"So I will own the land and my ltd building company will complete the works and invoice me zero rated, what a farce".

 

Not really as that is normal standard procedure for any VAT registered building company. Your Ltd. company will also be liable for Corporation Tax at some point during the financial year after completion of works..

[bil8999]

Yes, but why not just let me supply the materials and labour in my name as the owner of the land and let me claim back the vat, that's the farce.