Tuesday, October 2, 2018

VAT Exempt Conservatories and Orangeries

VAT Exempt Conservatories and OrangeriesThe current rules
There can be quite a bit of confusion around the application of VAT to the construction of conservatories and orangeries. In some circumstances it is exempt and at other times a reduced amount can be applied.

Under normal circumstances the standard VAT rate of 17.5% applies to your conservatory build. This is true even if you are in a conservation area, area of outstanding natural beauty or just within the green belt. These are all classified as normal circumstances, but knowing the circumstances where you can either avoid or reduce your VAT is essential, so here is a quick guide.

Avoiding VAT
There are 4 circumstances where VAT is either zero or reduced, these are: listed buildings, new buildings, barn conversions and uninhabited buildings. We will cover each one below.

Listed Buildings (0% VAT Rate)
When a conservatory or orangery is attached to a listed building then a zero VAT rate applies. According to HM Revenue and Customs a listed building either falls within the Planning Act 1990 or the Planning (Scotland) Act of 1997. Within England and Wales a zero rated listed building is either:

Grade I: of exceptional interest.
Grade II (A): an important building of more than special interest.
Grade II: a building of special interest, warranting effort of preservation.

Please note that you must make sure your conservatory is an approved alteration and you have got listed building consent from your local planning authority.

Please note that the Grade II (A) mentioned above should be actually Grade II star (Where star is denoted by asterisk symbol).

New Buildings (0% VAT Rate)
New builds within the UK have a zero rated VAT status. So if you have designed or specified your new house, make sure the conservatory or orangery is specified within this so that you legally avoid VAT. If your build has started you may still be able to add a conservatory or orangery but it is not straightforward so consult your local planning office. As a rule of thumb, six months from the date the approval been given is usually the cut off point.

Barn Conversions (either 0%, 5% or 17.5% VAT Rate)
Adding a conservatory or orangery to a barn conversion is the most complex of all the scenarios. One should always consult your local planning office for advice specific to your development, but as a quick rule of thumb the following should help:
0% Rates: If the barn is listed. Given that, be warned that it is usually very hard to get planning permission for a conservatory attached to a listed barn.
5% Rate: If the barn is being converted from an agricultural property to a residential property.
17.5% Rate: If the barn is already a residential property.

Uninhabited Buildings (5% VAT Rate)
If you are renovating a single dwelling that has been empty for the last three years then VAT will be applied at a reduced rate of 5%. To claim this you must have evidence that the property has indeed been empty and the building must be used for residential purposes after the renovation.

An increase in January
As of 4 January 2011, standard VAT within the UK will increase from 17.5% to 20%. In real terms this means the price of the conservatory or orangery will rise by 2.5%. So be sure to order before the period to avoid this increase.

Some conservatory or orangery companies may be offering no VAT offers or no VAT increase deals. Show some caution with these because they may not be all they appear. Reputable companies may just swallow the price increase but no vat deals could be more ominous. Very small installers may be just too small to be VAT registered and therefore offering you a price with no Vat. There are a couple of things to be concerned with here. First, the materials they buy will have VAT included so you are not avoiding the VAT on any of the material costs. Furthermore, this means they are a very small company or sole trader, so one has to question the guarantees they provide. It is recommended you avoid small traders for any project that is a reasonable size. You always have to ask yourself that if they are cutting corners with VAT, where else are they cutting corners? Whenever in doubt always use a reputable conservatory company.

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