Category Archives: Land & Property

VAT: EV charging points in new dwellings are zero-rated

By   1 September 2026
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HMRC has updated Notice 708 (para 13.8.1) on 26 August 2026 to include electric vehicle charging points in the list of accepted building materials ordinarily incorporated into a building or its site. These installations qualify for zero or reduced VAT rating when supplied alongside eligible construction or conversion services of the construction or conversion of new dwellings. 

It should be noted that this zero/reduced rating only applies to EV charging points as part of residential construction and that standalone equipment sales and public EV charging services have different VAT rules. 

VAT – Residential Property Triggerpoints

By   24 August 2026
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What to look out for

VAT and property transactions are uneasy bedfellows at the best of times.  Getting the tax wrong, or failing to consider it at all can result in a loss of income of 20% on a project, or forgoing all input tax incurred on a development. Even a simple matter of timing can affect a transaction to a seller’s detriment. Here I take a brief look at issues that can impact residential property transactions.  It is important to recognise when VAT may affect a project so I hope that some of these triggerpoints may prove useful.

General points

The following are very general points on residential properties. No two cases are the same, so we strongly recommend that specific advice is obtained.

Refurbishing “old” residential properties

Broadly speaking, the VAT incurred on such work is not reclaimable as the end use of the property will be exempt (either sale or rent). There is no way round this as it is not possible to opt to tax residential dwellings. It may be possible to use the partial exemption de minimis limits if there are any other business activities in the same VAT registration. If this is the only activity of a business, it will not even be permitted to register for VAT. There are special rules if the number of dwellings change as a result of the work (see below).

New residential builds

The first sale (or the grant of a long lease 21 years plus) of a newly constructed dwelling by “the person constructing” is zero rated. This means that any VAT incurred on the construction is recoverable. Care should be taken if the new dwelling is let on a short term basis rather than/before being sold as this will materially affect input tax recovery.  Advice should always be taken before such a decision is made as there is planning available to avoid such an outcome. VAT incurred on professional and legal costs of the development may also be recovered such as; architects, solicitors, advisers, agents etc. VAT registration is necessary in these cases and our advice is to VAT register at the earliest stage possible.

The construction of new dwellings is zero rated, along with any building materials supplied by the contractor carrying out the work.  The zero rating also extends to sub-contractors.  It is not necessary for a certificate to be provided in order to zero rate such building works.

Conversions

There are special rules for refurbishments which create a different number of dwellings (eg; dividing up a single house into flats, or changing the total number of flats in a block, or making one dwelling by amalgamating flats). Generally, it is possible for contractors to invoice for their building work at the reduced rate of 5%. This rate may also apply to conversions. A conversion is defined as work undertaken on a non-residential property, such as a barn, office or church, into one or more self-contained dwellings.  Once converted the sale of the residential property will be zero rated and all of the input tax incurred on associated costs is recoverable (similar to a new build).

Renovation of empty residential premises

Reduced rating at 5% is also available for the renovation or alteration of empty residential premises. Such a premises is one that has not been lived in during the two years immediately before the work starts. HMRC will insist on documentary evidence that the property has been empty for that time.

Purchase of a commercial property intended for conversion

If it is intended to convert a commercial property into residential use and the vendor indicates that (s)he will charge VAT (as a result of the option to tax having been exercised) it is possible for the purchaser to disapply the option to tax by the issue of a certain document; form VAT 1614D. This means that the sale will become exempt.  Advice should always be sought on this issue by parties on each side of the transaction as it very often creates difficulties and significant VAT and other costs (mainly for the vendor).

Mixed developments

If what is being constructed is a building that is only in part a zero-rated dwelling, a contractor can only zero-rate its work for the qualifying parts. For example, if a building  containing a shop with a flat above is constructed, only the construction of the flat can be zero-rated. An apportionment must be made for common areas such as foundations and roof etc. The sale of the residential element when complete is zero rated and the sale of the commercial part will be standard rated if under three years since completion.  If the commercial part is over three years old at the date of sale, or is rented rather than sold, the supply will be exempt with the option to tax available – details here.  If an exempt supply is made, the recovery of input tax incurred on the development will be compromised and it is important that this recognised and planning put in place to avoid this outcome.

DIY building projects

There is a specific scheme for DIY Housebuilders to recover input tax incurred on the construction of a dwelling for the constructor to live in personally.  Details here https://www.marcusward.co/?s=diy

Sale of an incomplete residential development

There are two possible routes to relief if a project is sold before dwellings have been completed (either new build or conversion).  This can often be a complex area, however, there is some zero rating relief which may apply, and also it may be possible to apply TOGC (Transfer Of a Going Concern) treatment to the sale.  In both cases, it is likely that input tax previously claimed by the developer should not be jeopardised.

Overview

There are VAT complications for the following types of transactions/developments and issues:

  • definition of a dwelling
  • arrangements where consortiums or syndicates are used/profit share
  • transactions in connection with nursing or children’s homes or similar
  • “granny flats” in the garden of existing houses
  • work on charitable buildings/ for charities
  • converting specific commercial property into residential property – particularly ex-pubs
  • sales to Housing Associations
  • sales of “substantially reconstructed protected buildings”
  • buying VATable buildings
  • date of completion – zero rating cut off
  • supplies by members of VAT groups
  • definition of building materials
  • input tax on white goods and similar
  • alterations for people with disabilities
  • garages with dwellings
  • land supplied with a property
  • buying property with existing, continuing leases
  • beneficial owner versus legal owner issues
  • change of intention (buying land/property with the intention of using it for one purpose, but the intention changes after purchase)
  • where professional/architect’s fees are incurred
  • planning gains
  • own use of a property
  • mobile homes
  • reverse premiums/surrenders/reverse surrenders re; leases
  • holiday lets and
  • hotels
  • business use by purchaser/tenant
  • contract stage of a property purchase where VAT is potentially chargeable by vendor
  • timing of supplies
  • work re; schools, churches, village halls, hospitals, or any other “unusual” structures

This list is not exhaustive, but I hope it gives a broad idea of where VAT needs to be considered “before the event”. As always, we are available to assist.

VAT: New zero rate for domestic electricity

By   27 July 2026
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The government has announced that the VAT rate for domestic electricity will be reduced from 5% to zero from 1 October 2026 in advance of winter costs.

It is stated that the government  expects that suppliers will pass the VAT reduction on to their customers (including those on fixed tariffs).

The VAT cut, from 5% to 0%, is estimated to reduce  CPI inflation by around 0.10 percentage points and RPI by around 0.14 percentage points.

This action is estimated to cost  around £850 million in 2026-27 on the basis of estimated electricity prices and will be funded by the cancellation of the Digital ID programme.

 

VAT – Building your new home: How and what to claim

By   20 July 2026
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The DIY Housebuilders’ Scheme
Building your own home is becoming increasingly popular.  There are many things to think about, and budgeting is one of the most important. 

The recovery of VAT on the project has a huge impact on the budget and care must be taken to ensure that a claim is made properly and within the time limits. You don’t have to be VAT registered to make a claim, this is done via a mechanism known as The DIY Housebuilders’ Scheme.  It has specific rules which must be adhered to otherwise the claim will be rejected.

If you buy a new house from a property developer, you will not be charged VAT. This is because the sale of the house to you will be zero-rated. This allows the developer to reclaim the VAT paid on building materials from HMRC. However, if you build a house yourself, you will not be able to benefit from the zero-rating. The DIY Housebuilder’ Scheme puts you in a similar position to a person who buys a zero-rated house built by a property developer.

Who can make a claim?

You can apply for a VAT refund on building materials and services if you are:

  • building a new home in which you will live
  • converting a building into a home
  • building a non-profit communal residence, eg; a hospice
  • building a property for a charity

Eligibility

New homes

The house must:

  • be separate and self-contained eg; not an extension
  • be for you or your family to live or holiday in (not for sale when complete)
  • not be for business purposes (although you can use one room as a work from home office)
  • not be prevented from sale independently to another building by planning permission or similar eg; a granny annexe

A claim may also be made for garages built at the same time as the house and to be used with the house.

Contractors working on new residential buildings should zero rate their supplies to you, so you won’t pay any VAT on these.

Conversions

The building being converted must usually be a non-residential building eg; a barn conversion. Also, residential buildings qualify if they haven’t been lived in for at least 10 years.

You may claim a refund for builders’ work on a conversion of non-residential building into home. These supplies will be charged at the reduced rate of 5% for conversion works.  If the standard rate of 20% s charged incorrectly, you will not be able to claim the standard rated amount. Care should be taken that the contractor understands the VAT rules for conversions as these can be complex.

Communal and charity buildings

You may get a VAT refund if the building is for one of the following purposes:

  • non-business – you can’t charge a fee for the use of the building
  • charitable, eg; a hospice
  • residential, eg; a children’s home

What can you claim on?

Building materials – You may claim a VAT refund for building materials that are incorporated into the building and can’t be removed without tools or damaging the building.

What doesn’t qualify

You cannot claim for:

  • building projects outside the UK
  • materials or services that don’t have any VAT, eg;  were zero-rated or exempt
  • professional or supervisory fees, eg; architects and surveyors
  • the hire of plant, tools and equipment, eg; generators, scaffolding and skips
  • building materials that aren’t permanently attached to or part of the building itself
  • some fitted furniture, electrical and gas appliances, carpets or garden ornaments
  • supplies for which you do not have a VAT invoice

Examples of items you can, and cannot claim for are listed below.

How to claim

Submit your DIY housebuilders VAT claim using HMRC’s official Digital Claim Service. Alternatively, download and print the VAT431NB Form (for new builds) or VAT431C Form (for conversions) to apply by post.

What you need to know

You must claim within six months of the building work being completed.

You will usually get the refund in 30 working days of sending the claim.

You must include the following with your claim:

  • bank details
  • planning permission
  • proof the building work is finished eg; a letter from your local authority
  • a full set of building plans
  • invoices – including tenders or estimations if the invoice isn’t itemised
  • bills and any credit notes

VAT invoices must be valid and show the correct rate of VAT or they will not be accepted in the claim.

HMRC usually examine every claim closely and often query them, so it pays to ensure that the claim is as accurate as possible first time.  We find a review by us before submission ensures the maximum amount is claimed and delays are avoided.

Payments made after completion of the house cannot be claimed, and only one claim can be made for the whole project, so cashflow may be an issue.

Examples of items that you can claim for

The items listed below are accepted as being ‘ordinarily’ incorporated in a building (or its site). This is not a complete list.

  • air conditioning
  • building materials that make up the fabric of the property eg; bricks, cement, tiles, timber, etc
  • burglar and fire alarms
  • curtain poles and rails
  • fireplaces and surrounds
  • fitted kitchen furniture, sinks, and work surfaces
  • flooring materials (other than carpets and carpet tiles)
  • some gas and electrical appliances when wired-in or plumbed-in
  • heating and ventilation systems including solar panels
  • light fittings – including chandeliers and outside lights
  • plumbing materials, including electric showers, ‘in line’ water softeners and sanitary ware
  • saunas
  • turf, plants, trees (to the extent that they are detailed on scheme approved by a Planning Permission) and fencing permanently erected around the boundary of the dwelling
  • TV aerials and satellite dishes

Examples of items that you cannot claim for

This is not a complete list.

  • Aga/range cookers (unless they are solid fuel, oil-fired or designed to heat space or water)
  • free-standing and integrated appliances such as: cookers, fridges, freezers, dishwashers, microwaves, washing machines, dryers, coffee machines
  • audio equipment, built-in speakers, intelligent lighting systems, satellite boxes, Freeview boxes
  • consumables eg; sandpaper, white spirit
  • electrical components for garage doors and gates
  • bedroom furniture (unless they are basic wardrobes) bathroom furniture eg; vanity units and free-standing units
  • curtains and blinds
  • carpets and rugs
  • garden furniture and ornaments and sheds

The Scheme can be complex, but here is our Top Ten Tips for claimants.

Please contact us if you require assistance with a DIY Housebuild project.

VAT: Changes to the Capital Goods Scheme

By   13 July 2026
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HMRC has produced a policy paper on the simplification of the Capital Goods Scheme (CGS).
The CGS is a mechanism for adjusting an input tax claim which requires a business to spread the initial input tax claimed over a number of years. If a business’ taxable use of the asset increases, it is permitted to reclaim more of the original VAT and if the proportion of the taxable supplies decreases it will be required to repay some of the input tax initially claimed. The use of the CGS is mandatory.

HMRC says its measure details the simplification of the CGS to reduce the administrative burden for VAT registered businesses.

From 29 July 2026:

  • computers and items of computer equipment will be removed from the list of assets covered by the scheme
  • the expenditure threshold for land, buildings and civil engineering work will increase from £250,000 (exclusive of VAT) to £600,000 (exclusive of VAT).
Existing assets and expenditure incurred before that date will continue to be treated under the current rules.
The Value Added Tax (Amendment) Regulations 2026 has been made to implement these changes.
The lifting of the CGS threshold for land and buildings is long overdue, but nevertheless welcome.

Updated VAT Notice 742A – Opting to tax land and buildings

By   2 June 2026
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HMRC has updated Notice 742A which explains the effect of an option to tax and will help a business decide whether to exercise that option. It also sets out whether an optor needs permission from HMRC before an option can be made and how to notify HMRC of a decision.

The update clarifies an important point: where opted land or building remain an asset on hand at the point of VAT registration cancellation, output tax must be accounted for on the value of that asset. The update also removes the information about a temporary change to the time limit for notifying an option as this has ended.

VAT: Public EV charging update

By   18 May 2026
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Further to the Charge My Street Limited case, which we considered here HMRC has published Policy Paper Revenue and Customs Brief 4 (2026): VAT liability of supplies of electricity from public electric vehicle charge points.

This paper sets out the VAT treatment of supplies of electricity from public EV charging points.

HMRC’s position remains that charging electric vehicles at public charge points is standard rated for VAT. 

Supplies of fuel and power to a domestic premises are subject to the reduced rate of VAT at 5%. HMRC’s long-standing policy is that electric vehicle charge points located in public areas do not qualify as domestic premises and the standard rate of VAT applies to the supply of electricity at these locations.

The First-tier Tribunal found in favour of Charge My Street Limited. It concluded that Note 5(g) of Item 1 of Group 1 of Schedule 7A to the VAT Act 1994 covers supplies of electricity to an identified person at any identifiable premises, provided the total supplied does not exceed 1,000 kWh in a calendar month. The FTT clarified there is no additional requirement for the premises to be owned or controlled by the person receiving the supply, nor do the premises need to be buildings. This means locations such as public car parks may be included. The FTT decided that supplies of EV charging at public charging stations fell within the de minimis limit for supplies of electricity, and so were deemed to be for domestic use and, accordingly, subject to the reduced rate.

HMRC has applied for permission to appeal the First-tier Tribunal’s decision.

VAT: Composite or separate supplies – The A & D McFarlane case

By   10 March 2026
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Latest from the courts

Yet more on composite or separate supplies. As a background to the issue please see previous relevant cases here here here and here. This is the latest the seemingly endless and conflicting series of cases on whether certain supplies are multiple or single. 

In the First-Tier Tribunal case (FTT) of Alan and Diane McFarland the appellants operated a ‘bed and breakfast’ for other people’s cattle.

The issue

The VAT issue was whether there were separate supplies:

  • zero-rated supply of animal food
  • exempt supply of land.

Additionally, the appellant contended that the supply of animal food was a principal supply, and everything else, including the land, was ancillary. 

HMRC took the view that there was a single taxable supply of ‘animal care’ and not separate supplies of exempt stabling and zero-rated feed. It also rejected the claim that the appellant had an exclusive right of occupation over any defined area, noting that there was no agreement conferring such a right with the consequence that this could not be an exempt supply. On the zero-rated animal foodstuffs point; HMRC concluded that the supplies do not qualify for zero-rating as the food provided formed part of the overall service of animal husbandry.

Legislation

  • Exemption: right over land or any licence to occupy land – The VAT Act 1994, Schedule 9, Group 1,  item 1
  • Zero-rating: animal feeding stuffs – The VAT Act 1994, Schedule 8, Group 1, Item 2.

Decision

The FTT found that there was a single standard rated supply of ‘looking after’ cattle. The supply made by the appellant fell squarely within the Levob (Levob Verzekeringen BV [C-41/04]) category, being so closely linked that they form, objectively, a single, indivisible economic supply, which it would be artificial to split. – HMRC notes on Levob here.

The supply was a fully integrated package of services directed towards the rearing and finishing of cattle. This included: daily mixing and provision of feed, management of water and housing, maintenance of handling facilities, statutory record‑keeping, and disease‑control obligations. These activities were inseparable in practice and indispensable for the operation of the recipient’s cattle‑finishing business. Neither the accommodation nor the feed, nor any other individual component, was offered or taken independently. There was a single price for the complete service. There was also a single invoice and a single description of the supply on the invoice. There was no indication on the invoice that both exempt and zero-rated services were being supplied.

The appellant provided a single composite service of animal rearing and management, to which all elements, including accommodation and feed, were merely constituent elements.

The Tribunal also dismissed the alternative argument of the that the supply of food was the principal supply, with all other elements, including accommodation and the wider activities being merely ancillary. The provision of food was not an aim in itself. The food could not sensibly be separated from the accommodation, handling, record-keeping and welfare-related functions that were also performed. It was, therefore, not the principal supply but an integrated component of the single composite supply.

The appeal was consequently dismissed.

Commentary

Yet another case on the perennial composite/single supply issue. This case was relatively straightforward and the outcome was no surprise. It is essential that businesses that potentially deal with agent/principal matters or make supplies at different VAT rates consider their position. Contracts, other documentation and the commercial reality need to be considered. We recommend that in such circumstances a review is carried out specifically to establish the correct VAT position .

Charging EVs at public stations is at 5% VAT – The Charge My Street case

By   10 March 2026
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Latest from the courts

Reduced VAT rate for public EV charging

In the First-tier Tribunal (FTT) case of Charge My Street Limited (CMS) the issue was whether the supply of electric vehicle (EV) charging in public places qualified for the reduced rate of VAT – 5%.

The appellant contended that the reduced rate applied to its supplies because they were provided at a premises and were below the de minimis – 1000 kilowatt hours (kWh) a month applicable to domestic use of electricity.

HMRC formed the view that these supplies were standard rated at 20% on the basis that what was being provided was not for ‘domestic use’. Furthermore, the de minimis was breached because the supply should be calculated by reference only to the period during which the electricity was actually being provided, rather than to a specific person at any premises in a month.

Legislation

The relevant legislation is found at The VAT Act 1994, Schedule 7A, Group 1, Item 1, Note 5(g),

Decision

The FTT found that ‘premises’ for this purpose did not require any concept of legal ownership by the recipient of the electricity, nor was it confined to buildings, but could include defined public spaces, such as car parks. The judge also accepted CMS’s argument that the de minimis limit is measured in terms of how much electricity is provided by a supplier to a person at any premises in the relevant month. It was accepted that public EV charging would always be under the 1000 kWh limit.

The FTT allowed appellant’s appeal in principle.

The ABC of VAT – property

By   15 December 2025
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A glossary

Anyone who has had even the slightest brush with VAT will know that it is a very complex tax. Now, multiply that complexity by the intricacy and occasionally arcane nature of property law and one may see that the outcome will be less than straightforward. I have produced a general guide and an article on residential property VAT Triggerpoints

I hope the following glossary will help with steering through some of the difficulties.

  • Annex– a building which is joined to or is next to a larger main building usually an extension or addition to a building
  • Assign – to transfer the right or interest in a property from one party to another
  • Break clause – a clause allowing either landlord or tenant to give written notice after a particular date or period of the tenancy in order to end the tenancy
  • Beneficial owner – party deemed to make a supply of property rather than the legal owner
  • Blocked input tax – VAT which a developer is unable to recover when constructing a new dwelling. Typically, expenditure on good such as; carpets, fitted furniture, and gas and electrical appliances
  • Building materials– goods ordinarily incorporated into a property which attracts similar VAT treatment to the construction services.
  • Capital Goods Scheme(CGS) – a method of calculating the recovery amount of input tax incurred on property over a ten-year period, Details of the CGS here
  • Certificate – a document issued to a supplier in order to obtain certain zero-rated or reduced-rated building work
  • Change of number of dwellings– usually a conversion from commercial to residential, or a single house into flats (or flats into a single house) at 5% VAT
  • Consideration– a thing done or given in exchange for something else = a supply. Usually quantified in money, but in some cases non-monetary consideration
  • Construction of new dwellings – a zero rated supply
  • Contract – legal document detailing the agreement of terms between the vendor and buyer
  • Contractor – entity responsible for building works
  • Conversion–work on a non-residential building which results in a property designed as a dwelling(s) being created
  • Covenants – rules governing the property in its title deeds or lease. May impact the definition of dwellings
  • Curtilage– either a garden, or an area surrounding a building which is deemed to be part of the property
  • Designed as a dwelling– a property initially designed for residential use, regardless of any subsequent alternative use
  • Dilapidations – items that have been damaged during a tenancy for which the tenant is responsible for the cost of repair or replacement. Usually VAT free
  • DIY Housebuilders’ Scheme – a scheme which ‘self-builders’ to recover VAT on a new build dwelling or conversion. Details here
  • Domestic Reverse Charge – a self-supply charge details here
  • Dwelling– a building deemed to be residential
  • Empty house – if, in the ten years before work on a dwelling starts, it has not been lived in, the work may be subject to 5% rather than 20% VAT
  • Exempt– a supply that is VAT free. It usually results in attributable input tax falling to be irrecoverable
  • Facade– a wall (or two walls on a corner plot) which may be retained without affecting the zero rating of a new dwelling construction
  • Grant– a supply of an interest in land
  • Holiday home – the sale or long lease of a holiday home cannot be zero-rated even if it is designed as a dwelling
  • Housing Association – a non-profit organisation which rents residential property to people on low incomes or with particular needs
  • In the course of construction– meaningful works that have occurred in relation to the construction of a building (but prior to its completion)
  • Incorporated goods – goods sold with a new dwelling which are zero rated and to which the input tax block does not apply. See white goods
  • Input tax– VAT incurred on expenditure associated with property
  • Interest in, or right over, land– the right to access to and use of, land. Usually via ownership or lease
  • Lease – legal document governing the occupation by the tenant of a premises for a specific length of time
  • Licence to occupy– a permission to use land that does not amount to a tenancy
  • Live-work units – a property that combines a dwelling and commercial or industrial working space. Usually subject to apportionment
  • Major interest–a supply of a freehold interest or a lease exceeding 21 years
  • Multiple occupancy dwelling – a dwelling which is designed for occupation by persons not forming a single household
  • New building–a commercial building less than three years old the sale of which is mandatorily standard
  • Non-residential– a commercial building which is not used as a dwelling
  • Open market value – likely sale price with a willing seller and buyer, with a reasonable period of marketing and no special factors affecting the property
  • Option to tax (OTT) – act of changing the exempt sale or letting of a commercial into a taxable supply. The purpose is to either; recover input tax or avoid input tax being charged. Details here
  • OTT disapplication– the legal removal of a vendor’s option to tax
  • OTT not applicable – the OTT does not apply to residential buildings (so VAT can never apply to dwellings)
  • OTT revocation– the ability to revoke an option to tax after six months or twenty years
  • Partial exemption– a calculation to attribute input tax to exempt and taxable. Generally, VAT incurred in respect of exempt supplies is irrecoverable
  • Person constructing – a developer, contractor or sub-contractor who constructs a building
  • Premium – upfront payment for a supply of property
  • Relevant Charitable Purpose (RCP)–the use by a charity for non-business purposes or for use as a village hall or similar
  • Relevant Residential Purpose (RRP)– dwelling used for certain defined residential purposes, eg; children’s home, a hospice or student accommodation
  • Reverse surrender– a tenant surrenders an onerous lease to the landlord and makes a payment to surrender
  • Share of freehold – where the freehold of the property is owned by a company and the shareholders are the owners of the property
  • Single household dwelling– a building designed for occupation by a single household
  • Snagging – the correction of building faults. Usually follows the VAT liability of the original work
  • Stamp Duty Land Tax (SDLT) – tax paid by a purchaser of a property. SDLT is increased if the sale of a commercial property is the subject of an option to tax
  • Substantial reconstruction– certain significant works to a listed building
  • Surrender– a tenant surrenders the lease to the landlord in return for payment
  • Taxable supply– a supply subject to VAT at the standard, reduced or zero-rate
  • Use as a dwelling – a building which was designed or adapted for use as someone’s home and is so used
  • Vendor – entity selling a property
  • Transfer of a Going Concern (TOGC) – the VAT free sale of the assets of a business as a going concern. This may include a tenanted property
  • Zero-rated– a taxable supply subject to VAT at a rate of 0%

We strongly recommend that advice is obtained if any property transaction is being undertaken.

Details of our land and property services may be found here.