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VAT discounts for empty homes

If you employ other people – such as builders, carpenters, plasters or plumbers – to work on your property, you are liable to pay VAT as part of the invoice they submit. A standard rate of 20% of the value of the work is charged as VAT.

VAT discounts

The good news, however, is that in order to promote particular matters of public policy, the government offers considerable reductions in the amount of VAT payable on certain types of home building project. Those reductions may reduce the amount of VAT to 5%, or in some cases reduce it still further to 0%.

The principal incentives are for those intending to increase the nation’s usable housing stock by returning empty homes to residential use.

HM Revenue & Customs rules of such VAT discounts are not entirely straight forward, but you might qualify for a discount on the following types of work:

 VAT discounted to 5% 

  • renovation of empty homes, or a flat that has been unoccupied for the previous two years and which is to be returned to residential use either by yourself or by tenants;
  • conversion of a commercial building into a house or flats; or
  • the installation of energy saving measures.

Zero-rated VAT

  • renovation of a house or a flat that has been empty for the previous ten years and which is to be returned to residential use by yourself or your family;
  •  the building of a new house or flat; and
  •  certain types of work for disabled people in their homes

Steps to take

  • If your proposed building works fall into any of these categories and you want to take advantage of the VAT incentives on offer, there are a number of steps in the process you may wish to keep in mind:


  •  if you are working on a property that is already empty or if the building works are substantial, it is likely to remain unoccupied for the duration of the renovation project;
  •  standard home insurance invariably lapses or is significantly reduced in its scope if a property is left unoccupied for longer than -45 consecutive days;
  •  such as that offered by ourselves at GSI Insurance

HM Revenue & Customs (HMRC)

  •  if you feel that the works qualify for a discounted rate of VAT, it may be prudent to contact HMRC in advance of the work commencing in order to confirm the relevant discount;
  •  you are likely to find it much easier to establish what rate of VAT applies before you pay it, rather than attempt to claim a refund of overpaid tax at a later date;

Your tradesmen

  • if the works qualify for a VAT discount, it is important that you inform the tradesmen who may be working for you before they present their invoices;
  •  many may not be aware that such discounts are available and, once again, it is easier to pay an agreed reduced rate rather than attempting to claim a refund later on.
  •  It may be seen, therefore, that VAT discounts may considerable reduce the amount of VAT for which you are liable, especially if the work you are commissioning applies to previously empty homes. With a little care and forethought you may help to ensure that your building and renovation proceeds smoothly – and more cheaply.
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