Value Added Tax and Listed Buildings

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Last revised: 7 October 2008

Introduction

 

Is the zero rate valid for all types of listed buildings?

How do I claim the zero rating?

Do all types of works attract the zero rating?

Are any other reduced levels of VAT available on works to historic buildings?

Is it necessary to gain listed building consent for alterations?

Contact details

Does the zero rate apply to all goods and services?

 
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Introduction

There are almost 4,000 listed buildings within the Kennet district and therefore the Council frequently receives enquiries relating to Value Added Tax (VAT) and historic buildings. VAT is applied by the Government to the cost of most goods and services in the UK. The standard rate is currently 17.5% but some goods and services may be exempt or carry a reduced rate. In the case of listed buildings, a zero rate of VAT may be applicable to certain types of works. This can be of great financial assistance to those carrying out such works, although there are strict rules dictating when a zero rate applies. These rules are managed and enforced by the VAT section of HM Revenue & Customs.

The following is an overview of these rules, designed to provide guidance but not be an exhaustive account of the full regulations. To gain a definitive answer on whether the works you are proposing are applicable for the zero rating you must contact HM Revenue & Customs (contact details given below).

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Is the zero rate valid for all types of listed building?

No. The listed building must be in one of a number of authorised uses. These include but are not limited to:

Use as a dwelling containing living accommodation.

For a charitable use (for non-business related activities), for example a village hall.

Use as a relevant residential purpose, for example a hospice or old persons’ home.

Curtilage listed structures (that is any object or structure within the curtilage of a listed building which, although not fixed to the building, forms part of the land and has done so since before 1st July 1948) will also be applicable for the zero rating if they fall into one of the authorised uses.

Please note that some works to scheduled ancient monuments are also valid for zero rating. If a building is designated as both a scheduled ancient monument and listed building, only scheduled monument procedures apply and hence it should be treated as a scheduled monument for VAT purposes.

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Do all types of works attract the zero rating?

No. The works must be an alteration and not repair or maintenance. The VAT office will determine whether works constitute an alteration or not on a case by case basis, however, some general guidance is available:

Works of repair and maintenance are classed by HM Revenue & Customs as ‘those tasks designed to minimise, for as long as possible, the need for, and future scale and cost of, further attention to the fabric of the building’. For example, re-pointing of brickwork with lime mortar, re-decorating, renewal of thatch, replacement of missing roof tiles, re-painting of woodwork or re-wiring.

A building is considered to be altered when its fabric, such as its walls, roof, internal surfaces, floors, stairs, windows, doors, plumbing and wiring is changed in a meaningful way. For example, extensions, replacement of a roof structure with a different form e.g. change from flat to pitched roof, installation of a window in a newly created opening or extension of the wiring system. Works closely connected to an alteration, including preparation work and making good, will also carry the zero rate.

Please note that if the need for an alteration comes about during the course of carrying out a repair or maintenance then such alterations would not be applicable for the zero rating.

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Is it necessary to gain listed building consent for the alterations in order for the zero rate to apply?

Yes. The alteration must have been approved as part of a listed building consent (LBC) in order for the zero rate to apply. LBCisrequired for the alteration or extension of a listed building in any manner which would affect its character as a building of special architectural or historic interest. This is a requirement under the Planning (Listed Buildings and Conservation areas) Act 1990. It is a criminal offence to carry out such works without having first obtained LBC. Applications for LBC should be submitted to the Council.

Generally speaking, the types of work that would be classified as an alteration in the context of zero rating are very likely to require LBC. Works of repair and maintenance often do not require LBC. It is important to remember, however, that any work, however minor it may seem, can affect the character and interest of the property. If there is any doubt it is advisable to write to the Planning Services department at the councilwith full details of your proposed works in order that we can determine whether or not a LBC application is required.

Please note that alterations that were carried out illegally without LBC, but which are then approved under a LBC application, are not valid for zero rating. However, alterations that are carried out under the terms of a listed building enforcement notice do apply for zero rating.

In the case of scheduled ancient monuments, scheduled ancient monument (SAM) consent is required rather than listed building consent. Applications for SAM consent are dealt with by the government’s Department of Culture, Media and Sport.

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Does the zero rate apply to all goods and services?

No. For example, professional services such as those from architects and surveyors do not attract a zero rate. It is also useful to remember that goods provided by a builder in the course of carrying out the valid alteration will usually be subject to the zero rating along with cost of labour whereas goods procured separately from retailers and builder’s merchants are charged at the standard rate of VAT. Goods hired on their own are always standard rated.

How do I claim the zero rating?

The contractor who is providing the valid goods and services should be VAT registered and would normally add VAT to the bill. In this case the contractor will simply zero rate the VAT on the bill. If the bill from the contractor contains both works of alterations that attract a zero rate and works of repair and maintenance that do not, then the bill must be divided between the two sets of works so that the standard rate of VAT can be applied appropriately. The contractor is likely to ask for a copy of the LBC decision notice together with information such a copy of the plans and schedule of works relating to the alterations.

Where a contractor has charged standard rate VAT but then subsequently discovers that the alterations are valid for zero rating, the contractor is able to reclaim the VAT and then pass the money back to the customer. This will not be possible if LBC was obtained after the works were carried out.

Are any other reduced levels of VAT available on works to historic buildings?

There are a few other situations where a reduced rate of VAT may be available. For example, the conversion of an unlisted historic commercial building in to residential accommodation may incur a reduced rate of 5%. Also, certain listed places of worship, which do not come under the usual controls for listed buildings, may have the benefit of a reduced rate. For further information on reduced rates please contact HM Revenue & Customs.

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Contact Details

VAT is administered by HM Revenue & Customs. The rules relating to VAT and listed buildings are set out in the booklet ‘Notice 708: Buildings and Construction’. This can be accessed on the HM Revenue & Customs website or alternatively they can provide a hard copy by post.

If you are planning to carry out works to a listed building and have any concerns or questions it is advisable to contact HM Revenue & Customs before commencing works. Advice can be accessed in the following ways:

By telephone: HM Revenue & Customs National Advice Centre, tel. 0845 010 9000

On-line: www.hmrc.gov.uk/

By Post: Visit the HM Revenue & Customs website to determine your regional VAT office.

This leaflet is one in a series of Conservation Information Leaflets produced by Kennet District Council. Copies of this and other leaflets in the range are available on the council website. If you require any further information or advice please contact:

Planning Services, Kennet District Council, Browfort, Bath Road, DEVIZES, Wiltshire, SN10 2AT
Tel: 01380 724911
Email: conserve@kennet.gov.uk

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