VAT on conservatories explained
31st August 2017
As conservatory experts, we are frequently asked about the topic of VAT on conservatories – and there is quite a bit of confusion surrounding this issue.
At present, VAT is payable at the current rate on ALL home extensions – including orangeries, conservatories, garden rooms, verandas and any other glazed extension.
But, just to make matters more complicated, there are a few exceptions!
This article aims to explain when and why different VAT rates apply, based upon certain conditions being met.
VAT on conservatories for new homes
As it stands, all new UK homes are zero rated for VAT. If you plan to buy or build a new house, include a conservatory in the plans and you will not pay any VAT on it.
If your new home is part way through being built, you may still be able to legitimately avoid paying VAT on a conservatory if the construction is complete before the dwelling is signed off as complete by the local authority.
Before starting construction work, it is important to check that permitted development rights have not been removed. If you are unsure about this, always ask your architect, builder or local authority for clarification.
According to Phil Ellerby, a tax specialist at Northern Accountants, a new conservatory will only qualify for zero rated VAT if:
- It is constructed at the same time as a new dwelling.
- It is shown on a new dwelling’s approved plans and built immediately following the property’s construction.
- The new conservatory’s size and design means it doesn’t need planning permission, and is not on the approved plans of the new dwelling, but it is built during or immediately after the construction of the new home.
- The construction of the conservatory MUST be finished before a completion certificate is issued by the local authority.
“It used to be the case that UK property owners could claim a zero VAT rate on conservatories for a new dwelling as long as they were completed prior to the property being occupied. Unfortunately, this is no longer the case,” says Phil.
“Now the conservatory must be built at the same time as the new home - or immediately afterwards and finished to a conclusion without a break - for the zero rate to apply.
“Once the completion certificate is signed off by the local authority, you will not be able to get a ‘zero rate’ applied to any additional work from that date.
“For example, if only the conservatory footings are constructed before the completion certificate is issued, only they will have the ‘zero rate’ applied. The rest of the conservatory’s construction would be charged VAT at the current rate - even if it was carried out before the owner moved in.”
VAT on conservatories for empty residential properties
Adding a conservatory to a property which has been uninhabited or lying empty for two years or more will qualify for a reduced 5% VAT rate if:
- The properties are being renovated as a single dwelling
- The property MUST continue to be used for residential purposes once all the work is complete.
For the 5% rate to be applied, you must have documentary evidence which proves the property was unoccupied for two years. Your local authority should be able to provide proof of this.
Before commencing any construction work, it is also important to check with your local VAT office to ensure that the 5% rate applies to your property.
VAT on conservatories for barn conversions
Whilst it can be difficult to get planning permission or Listed Building Consent to add a conservatory to a barn conversion or other agricultural building, it is sometimes possible depending on its design, style or size.
If you are successful in gaining permission, the following VAT rules apply:
- You might be eligible for VAT at the 5% rate if the barn is being converted from an agricultural property into a dwelling.
- If the barn has already been a dwelling but has been unoccupied for two years, the 5% VAT rate may apply.
- If the barn has been lived in already and not lied unoccupied for two years or more, any new conservatory you add would be subject to the standard VAT rate.
How to claim VAT back on a new conservatory
If you want a reduced rate of VAT applied to your project, you must use builders and tradesmen who are VAT registered and notify them in writing. They will then invoice without VAT or apply the 5% VAT rate on their labour costs and any materials they use.
If you intend to buy materials yourself, you will need to reclaim the VAT through HMRC within three months of the project’s completion.
VAT fraud and complying with the law
As we have highlighted above, there are ways to legitimately avoid paying VAT on new conservatories.
However, it is against the law for a company to offer a conservatory without VAT. It is also illegal for a customer to ask for a conservatory to be installed without paying the VAT.
Any potential customer who asks a builder or business to construct a conservatory without VAT, is committing an offence. By law, this is an attempt to commit VAT fraud and it should be reported to HMRC.
Click here to find out more details from the Government about the VAT rates which apply to residential dwellings.
Need more information or advice?
Please remember that the information provided in this article is for guidance only. If you need help about any financial matters, you should always seek independent professional advice.
Before building any conservatory, it is always a good idea to check with building control to see if planning consent is required.
If you want the new conservatory to qualify for the zero VAT rate, it is also a good idea to tell your conservatory designer and installer about your intentions so they have plenty of time to work closely with your architect or builder.
If you are in any doubt about the VAT rate which would apply, contact your local VAT inspector.
Having conducted hundreds of zero-rated VAT conservatory installations, we're happy to provide the information you need to legitimately avoid paying the VAT on conservatories - call 0800 181888 for our best interpretation of the current rules.