Bad news on listed buildings

My recent euphoria on an earlier previous post that included the words “possibly some good news on listed buildings” was somewhat deflated on the afternoon of the Budget.

With effect from 1 October 2012, the VAT relief that currently allows zero rating for certain types of work on listed buildings has been withdrawn. As a result of the Budget announcement, if work is carried out before 1 October 2012, it can still be zero rated; work done after that date will be liable to 20% VAT, unless any other relief happens to be available.

HMRC have announced a transitional relief, such that if a written contract was in place prior to Budget Day, for work to be carried out, the zero rating can still continue until 20 March 2013.

Unaffected by the Budget announcement is the 5% VAT rate for the following:

1) Where the house/flat etc. has been empty for 2 years prior to work starting;
2) Where the number of dwellings within a property is changing, up or down. For instance, splitting a property into flats, or vice versa;
3) Where a commercial property is converted into a residential property (eg a barn conversion);
4) For the installation of energy saving materials.
Also unaffected is the DIY Housebuilder’s Scheme, which allows VAT refunds in certain circumstances.

Well, what can I say, except that this is an appalling decision, to remove what little assistance there is, from those who are effectively looking after the heritage of this country. It is also appalling to dress up the change as ‘removing an anomaly’, and to suggest that “the majority of the work covered by the relief consists of extension work”. Has there been a survey of any description, that might prove this to be the case? I deal with listed properties every day of my working life and can assure you that this is not true. The majority of owners I deal with are people who care about their properties and much of what they have to do is to remove inappropriate features within the property that have been created, often before the property was listed. That work would have benefited from the VAT relief and the end result of removing the relief is that older properties will simply decay. With little encouragement to improve the property, many owners will simply put up with what they have, or else not buy a listed property in the first place. The end result will be the same – untold damage will be done to the heritage of the UK.

Any readers who care about historic property are encouraged to complain to their MP.

4 thoughts on “Bad news on listed buildings”

  1. Hi

    Apologies for the delay in replying. The answer is ‘maybe’.

    If you buy an existing commercial building over 3 years old, it would normally be exempt from VAT. However, owners have the opportunity to charge VAT or not, depending on their circumstances. This is a slightly complex area and the simple answer is to ask the vendor.

  2. We own a 10 year old Ltd company which owns 4 flats rented out and makes VAT returns on both on expenditure and income.
    Can we buy the properties out of the company , pay the CGT etc, close the company and then continue to privately rent out the flats but not be liable for VAT on the rental income.

  3. Good afternoon. Unfortunately, due to the vagaries of the VAT system, this is not a question I can answer in a couple of lines, as there is quite a bit more I would need to know first. Additionally, it is quite easy to have a stab at who you are and where you are, so I don’t really want to broadcast advice to you, when anyone else looking can work out who you are.

    If you would care to email me with the answers to the following, I will be happy to reply privately:

    1) Does the company have any other income, other than the holiday letting?
    2) Were the properties new-built, when you became VAT registered? And if so, what value?
    3) What is the value of all of the properties?
    4) What is the current annual value of the letting?
    5) What level of VAT have you reclaimed over the past years, whilst VAT registered?

    There may be more questions in due course, but I think that should do to be going on with.


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