Change of VAT Rate

The standard rate of VAT rose from 17.5% to 20% from 4^th January 2011; a measure predicted to generate some £13bn revenue by 2014/15. The lower VAT rate remains 5% and basic foodstuffs, children’s clothing and books continue to be treated as zero-rated supplies.

VAT affecting property and construction has always been a potential minefield and unless proper tax planning is carried out in advance of any transaction, the VAT costs incurred could be very substantial and largely irrecoverable to the reckless. 

In absence of specialist VAT planning advice, developers could find their projects become unaffordable or the pre-construction phase extended whilst value engineering or cost reduction exercises are undertaken to marry up the project costs with its increased funding and cash flow requirements.

For further information please contact our Real Estate VAT Consultant, Martin Scammell.