Reply To: Holiday homes VAT

Forum Categories VAT ON PROPERTY TRANSACTIONS Holiday homes VAT Reply To: Holiday homes VAT


According to HMRC website, holiday accommodation includes, but is not restricted to, any house, flat, chalet, villa, beach hut, tent, caravan, or houseboat. Accommodation advertised or held out as suitable for holiday or leisure use is always treated as holiday accommodation. There may be a restriction under which occupation of the property throughout the year is not permitted, but this will not always be the case. Residential accommodation that happens to be situated at a holiday resort is not necessarily holiday accommodation. For details of how to treat off-season letting see paragraph 5.6.

Sale of the property:
If it is a new dwelling (,3 years) with no occupancy restrictions, the first sale or grant will be zero-rated for VAT purposes as it can qualify as a dwelling. If new and occupancy restriction then its standard rated and you must account for VAT on the initial charge, and on any periodic charges such as ground rents and service charges.

if you sell it after 3 years of letting (no longer a new building building) then its sale is normally exempt from VAT.
Exempt sale means you cannot recover input VAT or HRMC has to clawback input tax claimed.

Conversion works:
If you are converting a non-residential building (or refurbishes a residential property that has been empty for two or more years) for use as holiday accommodation, the work can qualify for the reduced rate of VAT at 5%.