VAT and rental income | AccountingWEB

VAT and rental income

I have just read in my tax guide that "VAT covers many activities which would be regarded for income tax purposes as generating

investment income, for instance, the letting of property is regarded as a business for VAT purposes". 

I am familiar with commercial property and waiving the land exemption, but I have to confess that I have always assumed that buy to

let rental income did not come within the VAT regime.  Indeed, I have never come across anyone being VAT registered where their only

income was derived from residential lettings.  Unfortunately, the tax guide does not differentiate between commercial lettings and

residential short term tenancies.

I have a client who has, over a period of several years, built up a portfolio of residential property that represents his only source of

income.  Whilst he has yet to make a surplus in any year since he first started, he survives by selling a property every other year or so, 

his gross rents are now well over the VAT registration threshold.

Even though the losses to date could well support an arguement that he is not in fact in business, is the tax guide correct, should he

register for VAT? 


Many thanks to anyone able to clarify the position.



There are 7 comments. Login or register to view them.

Residential = exempt

Anonymous |

The Tax guide is correct

spidersong |

the flat rate scheme

Anonymous |


aidanjoseph |

Partially Exempt - Rented property

A.Sharp |

Rental income

mufeez.faiz |

Rental income

michaelhudson |