Understanding VAT Implications for Rent to Serviced Accommodation: A Guide from HMRC

VAT for Renting to Serviced Accommodation: What You Need to Know from HMRC!

The Liability of a Supply of Land

Understanding the VAT liability of land transactions is crucial for property owners, investors, and businesses involved in serviced accommodation. Here’s a detailed breakdown of the VAT treatment of various land-related transactions.

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3.1 The VAT Liability of a Supply of Land

The general rule is that the grant, assignment, or surrender of an interest in, right over, or licence to occupy land is exempt from VAT. However, there are notable exceptions to this rule:

DescriptionLiability and Further Information
Freehold sale or long lease in new dwellings, communal residential, or relevant charitable buildings by the person constructingGenerally zero-rated. Refer to Buildings and construction (VAT Notice 708) for more details.
Freehold sale of other types of new or partly completed buildings (e.g., shops)See paragraph 3.2
Freehold sale of new or partly completed civil engineering worksSee paragraph 3.3
Sale of land and buildings as part of a transfer of a going concernNot a supply for VAT purposes. Refer to Transfer a business as a going concern (VAT Notice 700/9) for more information.
ParkingSee section 4
Letting of facilities for sport and physical recreationSee section 5
Sporting rightsSee section 6
Hotel and holiday accommodationStandard-rated (or temporarily reduced rated). Refer to Hotels, holiday accommodation (VAT Notice 709/3) for more information.
Pitches for caravans on seasonal sitesStandard-rated (or temporarily reduced rated). See Caravans and houseboats (VAT Notice 701/20).
Pitches for tents or camping facilitiesStandard-rated (or temporarily reduced rated). See Caravans and houseboats (VAT Notice 701/20).
The right to fell and remove timberStandard-rated. If you sell land that contains standing timber, your supply is of exempt land.
Leasing and letting of mooringsGenerally standard-rated. Moorings for houseboats may qualify for exemption (see Caravans and houseboats (VAT Notice 701/20)). If the mooring charge is for a qualifying ship, the supply may be zero-rated (see Ships, aircraft and associated services (VAT Notice 744C)). A qualifying ship is a ship of a gross tonnage of not less than 15 tonnes which is neither designed nor adapted for use for recreation or pleasure.
Viewing accommodationSee paragraph 3.4

You can opt to tax land (including buildings). Once you have opted to tax, any supplies you make of the opted land will normally be standard-rated. For more information, refer to Opting to tax land and buildings (VAT Notice 742A).

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