Building work can be charged at 5% in the following circumstances:
- Renovating residential property that has been empty for more than 2 years
- Where the number of dwellings is being increased such as converting a house into flats
- Converting a commercial building into residential
- Converting a house into an HMO
VAT Notice 708 has the exact details and whether or not the 5% rate can be used is a matter of fact not opinion. HMRC will not give specific clearance, they will refer you to the rules and ask you to check the rules with your builder for your project.
The property owner doesn’t issue a certificate (as would be needed to Zero Rating), its for the builder/developer to determine whether and on what the 5% VAT rate can be applied.
The only exceptions (when a reduced rate certificate would be needed) are
(a) a home or other institution providing residential accommodation for children
(b) a home or other institution providing residential accommodation with personal care for persons in need of personal care by reason of old age, disablement, past or present dependence on alcohol or drugs or past or present mental disorder
a hospice
residential accommodation for students or school pupils
residential accommodation for members of any of the armed forces
a monastery, nunnery or similar establishment or
an institution which is the sole or main residence of at least 90 per cent of its residents
and will not be used as a hospital, prison or similar institution or an hotel, inn or similar establishment.
