Revenue & Customs Brief 74/07

VAT: reduced rate on residential renovations and alterations

With effect from 1 January 2008, renovations and alterations to residential properties that have been empty for at least 2 years will be eligible for a reduced VAT rate of 5%.

This is a change to the current law, which provides for a 5% reduced VAT rate on works of renovation and alteration to residential properties that have been empty for at least 3 years.

Contractors who are renovating residential properties that have been empty for at least 2 years as at 1 January 2008 should account for VAT at 5% on those supplies that take place on or after that date. Contractors should ensure they are fully aware of the tax point rules (see Notice 700 - The VAT Guide para 14) when determining the time of their supplies.

Further information on this reduced rate can be found in Section 8 of our Public Notice 708 – VAT: Buildings and construction, available from the National Advice Service 0845 010 9000 or downloadable from our website at www.hmrc.gov.uk.

Issued 14 December 2007