Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Land and Property

From
HM Revenue & Customs
Updated
, see all updates

Historical overview of legislative changes since 1 April 1989

Until 31 March 1989 most property transactions were exempt or zero rated. However, on 21 June 1988 the ECJ ruled that some of the UK zero rates were unlawful because they did not benefit the final consumer or follow a clearly defined social policy. Following the ECJ decision, zero rating was confined to dwellings, communal residential homes and a limited number of charity buildings. This ruling necessitated major changes to the UK legislation which took place on1 April 1989.

Summary of legislative changes since 1 April 1989 (apart from option to tax, which is covered in VATLP26000)

The following table contains details of the legislative changes since 1 April 1989:

Date Change Legal reference
     
1 April 1989 Freehold sale or grant of a lease in excess of 21 years, of a non-domestic building or site became exempt (but see below for new buildings). Schedule 9, Group 1, Item 1
1 April 1989 Freehold sale of a new, or partly completed, non-domestic building became standard rated. Schedule 9, Group 1, Item 1(a)(i)-(ii)
1 April 1989 Freehold sale of new, or partly completed, civil engineering works became standard rated. Schedule 9, Group 1, Item 1(a)(iii)-(iv)
1 April 1989 Where the major interest granted in a new dwelling is a lease or tenancy, service charges and rental payments (other than the first one) are excluded from the zero rating. Schedule 8, Group 5, Item 1, Note 14
1 April 1989 The freehold sale of sporting rights became standard rated. Schedule 9, Group 1, Item 1(c)
1 April 1989 The supply of space and stands to exhibitors for displaying or advertising goods became exempt. Schedule 9, Group 1, Item 1
1 April 1989 The grant of any right to occupy a box, seat or other accommodation at a sports ground, theatre, concert hall or other place of entertainment became standard rated. Schedule 9, Group 1, Item 1(l)
1 April 1989 The law was amended to make clear that the provision of accommodation in a caravan or houseboat is not zero rated. Schedule 8, Group 9, Note (b)
1 April 1989 The supply of seasonal caravan pitches became standard rated. Schedule 9, Group 1, Item 1(f)
1 August 1989 The option to tax was introduced. See separate historical overview in section 26000. Schedule 10, paragraph 2 - 4
1 August 1989 A self-supply charge on developers of new non-domestic buildings and civil engineering works was introduced. Schedule 10, para 5-6
1 February 1991 The supply of new holiday accommodation became standard rated. The term “holiday accommodation” was clarified so that chalets and beach huts were included. Schedule 9, Group 1, Item 1(e) and Notes 11-13
1 February 1991 The supply of a dwelling, or a site for dwelling, to be used as holiday accommodation became standard rated. Schedule 9, Group 1, Item 1(e) and Note 11, and Schedule 8, Group 5, Note 13
1 January 1992 The supply of certain personal rights (which only arise in Scotland) became exempt. Schedule 9, Group 1, Item 1
1 January 1992 The grant of certain rights and options to purchase land, where the legal or actual interest in land to which the right or option relates would be standard rated, also became standard rated. Schedule 9, Group 1, Item 1(n)
1 January 1992 Any grant pursuant to a developmental tenancy, lease or licence became standard rated. (This relates to the self-supply charge.) Schedule 9, Group 1, Item 1(b) and Note 7
1 January 1992 The self-supply charge was extended to include reconstructions, enlargements or extensions to existing buildings and civil engineering works. Schedule 10, paragraphs 5(8) - 5(10) and 6(7)-6(8)
1 January 1992 Legislation amended to treat grant of a right to take game or fish as exempt when supplied with freehold of the land over which the right is exercised. Schedule 9, Group 1, Item 1(c)
1 January 1992 Value of self-supply charge amended to cover situations that spanned a change in VAT rate. Schedule 10, paragraphs 6(3) -6(4)
1 October 1992 The self-supply charge was amended to exclude costs incurred by someone else other than the developer (eg the tenant’s fitting out costs) from the developer’s output tax figure. Extra-statutory concession
1 April 1994 The exemption for domestic service charges was widened to include all mandatory service charges paid by occupants, regardless of the interest held (freehold or leasehold). Extra-statutory concession
1 March 1995 Developers self-supply charge abolished (but with transitional provisions until 1 March 1997). Schedule 10, paragraphs 5-7
1 March 1995 Legislation amended to formally include surrenders and reverse surrenders in Item 1 for exemption. Schedule 9, Group 1, Item 1, Notes 1 and 1A
19 March 1997 - deemed to have always had effect Section 96(10A) introduced to confirm that where the grant of the interest in a property gives rise to subsequent supplies the VAT liability of the subsequent supplies is based on the circumstances at the time of the supply and not the circumstances at the time of the original grant. VAT Act 1994 Section 96(10A)
9 April 2003 Subsection 96(10B) introduced to prevent section 96(10A) applying to the freehold grants of new commercial buildings and the freehold grant of bare land with the subsequent construction of a commercial building. VAT Act 1994 Sub-section 96(10B)
1 June 2008 Schedule 10 paragraphs 5 & 6 (the Developers self supply charge) repealed. NB the charge was abolished with effect from 1 March 95 (transitional provisions applied until 1 March 97). VAT Act 1994 Schedule 10 paragraphs 5 and 6
1 June 2008 Schedule 9 Group 1 Item 1(b) (developmental tenancy, etc) repealed (operative from 1 June 2020 VAT Act 1994 Schedule 9 Group 1 Item 1(b)
1 June 2008 Section 51A & Schedule 10 paragraphs 8(2) & (3) (Treatment of co-owners of land/beneficial interest) repealed before coming into force. These had been inserted by FA 1995, but with effect from an appointed day. VAT Act 1994 Section 51A & Schedule 10 paragraphs 8(2) & (3).
1 October 2012 The change in law affirmed the provision of storage facilities is standard rated. Paragraph (ka) was inserted by the FA 2012. As a consequence of the change in legislation under paragraph (ka), the following legal notes were added to define and clarify certain terms (15A,B,C,D,and E) which were also inserted by the FA 2012 VAT Act 1994 Schedule 9 Group 1 Item 1(ka); Notes 15A,B,C,D and E; 19.
1 October 2012 Item 1 (ma) inserted by FA 2012 to formally include the grant of facilities to supply hairdressing services within the exception category. VAT Act 1994 Schedule 9 Group 1 Item 1(ma); Notes 17, 18 and 19.