Can I reclaim VAT on a partial knock-down and rebuild?
I am considering buying a property that has planning permission to knock down the existing property and build a 174m² dwelling in its place. However, a small part of the existing house (about 20%) is listed and has to be retained and refurbished. I cannot work out whether I can reclaim the VAT on this project. I read that that you can’t if any part of the existing house is retained.
The architect I have hired has designed a contemporary glass corridor joining the new house to this smaller section of the old one that must remain. This issue could be a deal breaker for the project’s viability and neither my agent nor the planning office has given me a clear answer.
e existence of a planning condition requiring you to retain 20% of the property will have no bearing on the VAT reclaim. So I am afraid you will not be able to claim, as it is not a completely new dwelling. You would only get a pass if it referred to keeping a single facade (or two on a corner plot). It sounds like you are obliged to retain more than this, but without further details I do not know for sure. Similarly, the listed status of the remaining part of the house is irrelevant to the tax situation.
So, in your circumstances, full VAT will likely be payable on the whole project. e rules are open to interpretation and there are exemptions, so call the VAT DIY helpline to see if you might claim exemption or some relief. e number is 0300 200 3700.