VAT back on newbuild/extension

carlsagen

I think I've had some duff advice and after reading different bits of information online I'm still confused.

Basicly, I have an old run down barn on my plot that I'm looking to develop into a dwelling. However that dwelling will be joined to my existing house rather than being independent.

I was told I could claim the VAT back on the building materials. However, since reading this only seems applicable if it's not been lived in for 10+ years (which it hasn't) and will be a new dwelling rather than an extension.

Abviously if I can't claim it back it will effect my budget by a fair few grand.

Much appreciated.

Ozzuk

I'm pretty sure you can't claim VAT back on an extension. Perhaps you could get round it by building as a separate unit then joining it at a later date but that in itself could cause other issues.

carlsagen

What other issues could that cause?

dimbo61

Two seperate buildings!
Council tax for 2 properties
Planning permission
Building control
Two lots of utilities for gas, water, electric etc
Sorry if my spelling is wrong

booksurr

Ozzuk wrote: »

Perhaps you could get round it by building as a separate unit then joining it at a later date but that in itself could cause other issues.

obvious possibility already addressed in the rules... the status of the building cannot be changed during the first 10 years or else the VAT must be paid

Doozergirl

Is it going to be a separate dwelling?

An extension catagorically means an extension to your existing dwelling - you live in it and there is a connecting doorway etc. That is rated at 20%.

Converting an attached building to a completely separate dwelling, and having full PP should be reduced rate VAT. Totally new dwellings are zero rated for relevant purchases, but if it was part of your house and is being split then it might be 5%. That's better than a kick in the teeth.

Do you have a link to the planning docs?

booksurr

carlsagen wrote: »

Basicly, I have an old run down barn on my plot that I'm looking to develop into a dwelling. However that dwelling will be joined to my existing house rather than being independent.

then it might fail one of the the tests for "qualifying building"

- there is no provision for direct internal access from the dwelling to any other dwelling or part of a dwelling

https://www.gov.uk/government/publications/vat-notice-708-buildings-and-construction

carlsagen

I don't have a link to the planning yet as its being amended.

The barn is currently a separate building that i use for storage. The plans will convert the barn to three upstairs bedrooms, a large downstairs area with utility. A new build single story 'link' will connect the old house to the new. So yes it will be linked in some way.

Ideally it was to allow my parents to sell up and move to live closer with us while retaining some independence in a separate but 'joined' extension.

Thanks

Doozergirl

20% VAT then. You need the planning permission for a completely separate dwelling to benefit from reduced rate VAT.
Is there any danger of you obtaining that?

The reduction is on more than just building materials. Are you building it yourself?