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HMRC internal manual

VAT Construction

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HM Revenue & Customs
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Introduction: laws and regulations

Zero rates

The Value Added Tax Act 1994, section 30 holds that goods and services specified in Schedule 8 to the Act are zero-rated. Guidance is provided on the following zero rate groups:

  • Schedule 8, Group 5, which specifies when the construction and the conversion of a building is zero-rated and the sale or long lease of a building is zero-rated
  • Schedule 8, Group 6, which specifies when the alteration (and the supply of building materials with those services), sale, or long lease of a protected building is zero-rated.

Reduced rates

The Value Added Tax Act 1994, section 29A holds that goods and services specified in Schedule 7A to the Act are reduced-rated. Guidance is provided on the following reduced-rate groups:

  • Schedule 7A, Group 6, which specifies when a residential conversion is reduced-rated
  • Schedule 7A, Group 7, which specifies when the renovation and alteration of a building is reduced-rated.

Other provisions

The ‘change in use’ provisions for certificated buildings are in the Value Added Tax Act 1994, Schedule 10, Part 2.

The rules that ‘block’ developers from deducting input tax on goods that are not building materials are found in the VAT (Input Tax) Order 1992 (SI 1992/3222), articles 2 and 6.

The special time of supply rules for builders are found in the Value Added Tax Regulations 1995 (SI 1995/2518), regulation 93.

The rules for the self-supply of construction services are found in the Value Added Tax (Self-Supply of Construction Services) Order 1989 (SI 1989/472).

The rules for the Refund Scheme for do-it-yourself builders and converters are found in the Value Added Tax Act 1994, section 35; and the Value Added Tax Regulations 1995 (SI 1995/2518), regulations 200 and 201.