Council tax and VAT exemption

[sg1999]

Hello

We are building a rather large extension, almost a rebuild, and would like to know if it is possible to obtain council tax exemption since we will not live in the house for the duration of the build (no roof, no water, no electrics, no walls etc) and also can we obtain a VAT exemption as we are building so much more than a typical extension ?

Thanks

 

[Nakajo]

Regarding the VAT, you would need to speak to a specialist tax lawyer, who might tell you that it is possible (although I suspect not in this instance), but that there's always a risk that HMRC will revise their interpretation of their rules to suit their interests. There will be a fee for this advice, but considering you can get the build zero-rated, it can be very well worth it. Regarding the Council Tax, why not ask the Council?

 

[lt8480]

For council tax apply to the council for the property being empty as a deduction or exemptions.

You may be able to get a reduced 5% rate for building work if the building has been vacant a sufficiently long time.

If you rebuild sufficiently you can get zero rated on the entire build. Generally the most you can keep is one elevation, and some footings. If almost a rebuild you may be best to knock down and rebuild to get the zero exemption.

 

[wessex101]

As mentioned above for VAT exemption the property has to be significantly demolished, I can't remember the details but I looked in to it a while ago but a property with no roof, no internal floors, no services and only 2 and a bit external walls standing did not qualify

For Council Tax other than the usual empty home exemption which is usually about 6 months but varies between Councils, if the property is sufficiently demolished that it ceases to be a dwelling then you can get it removed from the rating list by applying to the District Valuers Office.Trouble is when you apply to get it re-entered on to the rating list then can re-value it and you Council Tax can go up dramatically.

 

[sg1999]

I looked in to it a while ago

Do you remember who/which authority you applied to? I called the Building Control in the council and they said the VAT is a national requirement and has nothing to do with them and they would not be able to advise me in any way.

 

[lt8480]

The council will only deal with the council tax reduction/exemption. As they have said they don't deal with VAT and won't give you advice regarding VAT.

There's quite a lot of information on-line though with regards to VAT and construction work. There is simply to much to summarise concisely so be prepared for the long read:

https://www.gov.uk/government/publi...ion/vat-notice-708-buildings-and-construction

https://www.gov.uk/government/publi...zero-rating-the-construction-of-new-buildings

If classed as new build and you are appointing a single contractor then zero rating is relatively straight forward I believe and the contractor will simply deal with it and zero rate the works (i.e. they simply don't charge you any VAT on the wrks).

I think if it is a self build you have to pay VAT then claim it back.

The reduced rate is a bit more complex and you may need to seek professional advice. If appointing a single contractor they have to be satisfied they are charging VAT correctly because if they get it wrong they can end up with the VAT liability, and if they haven't charged you it correctly they end up potentially footing the bill to the tax man.

 

[Notch7]

Do you remember who/which authority you applied to? I called the Building Control in the council and they said the VAT is a national requirement and has nothing to do with them and they would not be able to advise me in any way.

HMRC I wouldve thought

 

[Nakajo]

Gah, I wouldn't ask HMRC!

 

[lt8480]

HMRC will usually point you to the website as all the information is there.