VAT on property development

A Guide to VAT For Residential Property Developers!

It is considered to be a challenging and long-winded task when you have to deal with the conversion of a property. It required a long period which makes it a time-consuming task as well. You might get surprised that it takes a long time of months and even years till you achieve the completion. There is an obvious involvement of labour physically to ensure the development of the property. Affairs like VAT on property development and other tax-related matters like costing might not get enough attention. Even though the importance of tax affairs is none less than the labour and physical work.

This side of handling costing, tax, and VAT on property development should not be overlooked. There is no doubt that all businesses across the world have had a tough time handling the complexity of VAT. If you are worried about the ways to seek out balance between labour work and relevant tax affairs, we have got you covered here. In this guide, we will help you with everything that you need to know about the main VAT considerations that you will need to apply to be a residential developer. This includes VAT on property development and conversion and construction of new and old properties.


Get in touch with one of our professionals to learn more about VAT on property development. We will love to hear out your queries and provide instant solutions. 


VAT on Property Development –  New Residential Buildings

When the time comes to build a residential property finally,  the major and the very first grand is that it is considered zero rated for VAT. In the case of partially constructed residential properties, the rule remains the same. This is because the property known as partially constructed property is going through the phase of construction as yet. On the other side, when the property developers are working on such a project where they aim to convert a non-residential property into a residential property, the first grant advantage will remain the same again.

The good news about the zero-rating is that a  0% VAT will be charged for the developers who are offering these kinds of taxable supplies. Moreover, the amount of cost that is involved in this process will be charged with VAT and they are liable to get full recovery in this matter. You need to know that the first grant is only given well when the supplies are handled by the same individual who is involved in the conversion or construction of your property. There are chances of mismanagement in this part as the status of developers tend to be used by multiple people. This happens in many cases.


Conversion and Construction – VAT Explained

Now, we all know about the supplies that are delivered to the builders to construct or convert a property are considered to be zero-rated. Moreover, what is important to know more is about the services that are used in the process of construction or conversion of a building. Surveyors and architects are a few examples of such services. These services are excluded from the list of zero-rated supplies and belong to the standard rated list.

Furthermore, if you are wondering to see any possibility that makes such services zero-rated too. You will only find the exceptions in it when the services like architects and others are a part of the building designing project. The design of a building when associated with the building part can be dealt with as a zero-rated supply. The case of material supply that is used to construct the buildings will also be treated as zero-rated. However, other than the services if such materials are supplied on their own, liability will come under the standard rate.

Therefore you must understand the difference between what materials and services can be treated as zero-rated or standard-rated. Some of the conversions of buildings can get the benefits of reduced VAT charges. You must notify the list of residential conversions that are allowed to get the advantages of the reduced ratings. These include the following:

  1. If you observe a change in the dwelling numbers like a single residence and a converted block of flats.
  2. Also when a property developer aims to get the commercial property converted into a residential property.

Moreover, in the cases where the builders aim to redecorate an old building but the homes in that particular building remain the same in numbers. All the services included in such projects will come under the list of standard rates.


The Bottom Line

Now that you have gathered a fair amount of information about VAT on property development, we can bring the discussion toward wrapping up. We can say that we do not deny the complexity level of handling VAT and relevant variations, especially in the case of property developers. However, having a better understanding of VAT and how is it charged on material, supplies and services according to different scenarios of building construction will keep you protected from any hassle in the future.

You are advised to consult with an expert to identify which category belongs to your case of property conversion or construction. We hope these few minutes of reading will help you to develop a better understanding and handle your VAT charges more efficiently.


Call or request a callback to speak to one of our professionals to discuss your queries about VAT on property development. We are available from 9:00 am – 05:30 pm Monday to Friday. 


Disclaimer: The information about VAT on property development provided in this blog includes text and graphics in general. This does not intend to disregard any of the professional advice.


Leave a Comment

Your email address will not be published.

Request A Callback

Call Now