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Background to the reduced rate for residential conversions

In Budget 2001 a number of measures to help regenerate Britain's towns and cities including a cut in the rate of VAT to 5% to encourage renovation and conversion of existing property. This measure was introduced by FA 2001, s 97(1)¹ in relation to relevant supplies made on or after 12 May 2001.

Further measures were announced in the 2002 Budget which extended the scope of the provisions to the conversion, and the renovation and alteration, of buildings other than dwellings². For renovations and alterations, see V4.413.

Scope of reduced rate for residential conversions

The following³ are liable to the reduced rate of VAT at 5%⁴:

1. Ìý

   •ÌýÌýÌýÌý the supply, in the course of a 'qualifying conversion', of 'qualifying services' related to the conversion

2. Ìý

   •ÌýÌýÌýÌý the supply of building materials if:

3. Ìý
   1. Ìý

      –ÌýÌýÌýÌý the materials are supplied