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HMRC internal manual

VAT Construction

Dwellings - an explanation of terms: what ‘single household dwelling’ means

In order to qualify for the reduced rate, a residential conversion must result in a change in the number of single household dwellings - for example, where a non-self contained dwelling is converted into a self-contained one.

The reduced rate is also applicable where a single household dwelling that has been empty for at least two years is renovated or altered

What ‘single household dwelling’ means

A ‘single household dwelling’ is defined in Value Added Tax Act 1994, Schedule 7A, Group 6, paragraph 4 of the Notes.

What ‘designed for occupation by a single household’ means

What is meant here is that all the elements of living (that is, washing, cooking and toilet facilities with space for eating, resting and sleeping) are situated in a discrete area for occupation by a single household. An example of a single household dwelling would be the typical family home, whether flat or house. A household can be a single person or a family.

This contrasts with a ‘multiple occupancy dwelling’ (VCONST14500), where the living space, to varying degrees, is shared between separate households.

A dwelling is ‘designed’ for a single household if it was built for that purpose (and not altered to something different - for example, offices) or has been altered to that purpose from some other use - for example, a barn.

Conditions

VCONST14120, VCONST14130 and VCONST14140 apply in the same way as they do for buildings ‘designed as a dwelling or number of dwellings’.

If the conditions aren’t met before the conversion works begin but can be met after works are completed, the reduced rate will apply.

An example of non-self contained accommodation is a bedsit where some of the elements of living are shared with other bedsits.

In Piers Minoprio (VTD 17806) the appellant argued that works to his dwelling weren’t works to a single household dwelling (because it wasn’t self-contained) but resulted in a single household dwelling after the work (because it became self-contained), and was therefore eligible for reduced-rating. The Tribunal found that the dwelling (an upstairs flat which didn’t have its own independent access because the lobby from which the stairs led also served a coach house and stables) was a self-contained dwelling both before and after the works were carried out:

In order to access the flat from the outside it was necessary to go through the lobby, the main door being to the yard… [The Appellant] relied on the fact that between the lobby and the staircase there was only a glazed partition and a timber door with a lock that was not working…

We find as a fact that the first-floor dwelling was self-contained. We accept [HMRC’s] submission that the type of door was not relevant. Nor could the question whether the flat was self-contained depend on whether the key was lost or the lock broken.