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HMRC internal manual

VAT Construction

Reduced-rating the renovation or alteration of empty residential premises: qualifying services: renovation and alteration

For a supply to be reduced-rated it must be ‘a qualifying service’ supplied ‘in the course of’ the renovation or alteration and be ‘related to it’.

The terms ‘renovation’ and ‘alteration’ are not defined. However the Value Added Tax Act 1994, Schedule 7A, Group 7, paragraph 2(1) to the notes does inform as to what is included.

For the purposes of the reduced rate, and in order to maximise the use of it, the terms ‘renovation’ and ‘alteration’ include any works of:

  • repair
  • maintenance


  • improvement.

In other words, a reduced-rated supply is ‘a qualifying service’ performed ‘in the course of’ and ‘related to’ one of the above activities. In practice, a qualifying service is always likely to qualify for the reduced rate.