A business can zero rate the construction of certain buildings, subject to relevant conditions. This document covers this in detail, together with the demolition and party walls; HMRC’s information sheet; evidence; constructions incorporating existing buildings; treating relevant residential purpose buildings as dwellings; sub-contractors; extending existing buildings; relevant charitable purpose buildings; services that can and cannot be zero rated; and mixed site developments..
This guidance note provides an overview of the current VAT rules regarding when the construction of a new building can be zero-rated. HMRC Notice 708
This should be read in conjunction with the Definition of dwelling, relevant residential and relevant charitable purpose guidance note.
Conditions to zero rate the construction
A business can zero rate the construction of the following buildings:
- designed as a dwelling
- will be used solely for a relevant residential purpose
- will be used solely for a relevant charitable purpose
VATA 1994, Sch 8, Group 5, item 2
Basic conditionsThe following conditions must be satisfied before the construction can be zero-rated:
- zero-rated building will be constructed