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VAT on Land and buildings

When does standard VAT apply on land and buildings; and the same applies to zero rate and reduced rate?

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    VAT on land and properties is a complex area and I can only explain in detail if I have more information about your question. Generally VAT on land and properties is applied as follows.

    Intial grant of land for freehold or leases of more than 21 years (in England) /20 years in Scotland for residential purposes is zero rated
    Standard rate (20% ) on repairs carried out by a VAT registered trader;
    Reduced rate (5%) on the renovation of an empty property
    Zero rate (0%) on alterations to listed buildings till 1st October 2012
    Exempt when a second hand residential property is sold;
    Standard rate where option to tax applies, on the lease or sale of commercial buildings;
    Outside the scope of VAT when the building is sold as part of a trade.
    VAT at the standard rate will apply to income from holiday and hotel accommodation, not just furnished holiday lettings.
    Where the building costs over £250,000, the capital goods scheme may restrict the VAT that can be reclaimed if the building is sold within 10 years.
    Distressed property – reduced rate 5% if converting a building to a different number of dwellings or converting a commercial building into a residential one. However, the transformation of a pub with a flat above it into one large house must be charged at the full standard VAT rate as there is one dwelling before conversion (the flat) and one afterwards (the house).

    The 5% rate of VAT can also apply where the number of dwellings in the building does not alter but the property has been empty for at least two years before the work begins. This reduced rate of VAT applies to building materials used in the renovation, but not to the labour


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