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VAT on house extensions

A friend in the building trade mentioned that he had read somewhere about a proposal in the pipeline to abolish VAT or zero rate work done on an extension to a house. The intention behind this idea appeared to be an incentive for people to build an extension to an existing house rather than building new on a greenfield site.

Has anyone heard about this? Is there any serious mentions of timescale for this?

I would appreciate any information as I have been unable to locate any via the usual channels.
Doris H


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19th Apr 2006 10:01

No new zero rates
The UK cannot introduce any new zero-rates. The lowest rate allowed under EC VAT law is 5%.

The UK Govt has already reduced some construction services involved in the renovation or conversion of some properties to 5%. This only applies to houses that have been empty for more than 3 years or to conversion that change the number of dwellings (i.e. a house into a number of flats or vice-versa).

However, I do not believe that there are any plans to extend this to all construction services (although this has been done in some countries). It is unlikely that it would ever apply to the construction of extensions.


Paul Taylor
VATease - VAT Advice

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