No Use Empty VAT reduction: how to make the most of it

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Owner of an empty property that you intend to renovate? You’re in luck!

House renovations are expensive work for all of us, especially given the current financial climate and rising house renovation costs, so we’ll let you in on a little-known incentive that could save you a big chunk of budget.

On a standard renovation, you’ll pay 20% VAT on goods and services, but this rate can be reduced (sometimes all the way down to zero) if you’re renovating a property which has been empty for a while. In this post, we’ll cover the basics of how to take advantage of No Use Empty VAT reduction so you’re in the know, even if your tradespeople aren’t.

No Use Empy VAT reduction: How to save a chunk of change

VAT on residential properties

Since the beginning of 2008, residential properties that have been empty for two years or more are eligible for a reduced VAT rate of 5% when it comes to renovations and alterations.

If you work with a VAT-registered builder, this means you can save 15% on ‘materials supplied and fixed’ which might well outweigh saving the usual 20% on labour overall.

Many local councils encourage this to bring empty homes back into use so it’s worth chatting to your local authority if you’re considering this.

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VAT on conversion of non-residential properties

We’re seeing more and more ex-commercial (and similar) properties being converted into beautiful homes these days. In part, this is due to more government support such as not needing Planning Permission on converting commercial to residential. 

If this is your situation, you’re in luck because you can save everything you’d pay in VAT and, in turn, either make a significantly greater profit or spend the savings on interior styling and making your house a home. 

‘A developer or house owner can claim back all VAT charged on the renovation of a building that has been empty for 10 years or more, once the dwelling is sold. If the house owner retains the property for private residential use, they can make a claim for the VAT under the DIY Builders Refund Scheme available from Customs and Excise.’

OUR RENO CLUB STUDENT’S SARA & JAMES’ RENOVATION

VAT on energy efficiency measures

Installation and adaptation of certain things that will make a home more energy efficient can also attract a reduced VAT rate. Think upgrading central heating, updating insulation, fitting solar panels etc.

VAT on changing the number of dwelling units

If you’re taking on a project like converting a house into flats or knocking adjoined homes into one and thereby changing the number of ‘homes’ then the work is eligible for a reduced VAT rate of 5%.

VAT on new homes

If you’re undertaking the construction of a whole new home then, lucky for you, you’ll enjoy zero VAT. You can either work with your builders on how to make this saving or make a one-off claim for a refund on the VAT of all eligible materials under this section of the incentive.

If you’re unsure if the No Use Empty VAT reduction incentive applies to you or you’re still struggling to make sense of how to take advantage of it, check out the No Use Empty website for full details.

We’d love to support you!

We’re passionate about helping first time renovators tackle their projects in the correct order and in an organised way so that ultimately you make the most of your home, your budget and enhance your life when your renovation is finished.

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