VAT change offers conversion rebate

A RECENT change in the rules governing VAT will save many people thousands of pounds on the cost of building or restoring their home, writes Sue Fieldman.

However, others will face a huge bill, when previously they would have paid nothing.

People who convert a barn, warehouse, office, or other non-residential building into a home, can now reclaim the VAT on all goods and most services incurred.

Martin Scammell, a senior manager with chartered accountants Ernst & Young, said: 'The concession applies to DIY conversions completed after 21 April 1994. And there is a time limit - you have to apply no later than three months after the completion of building. People who completed in the last few months should act immediately.'

Anyone buying a freehold or long leasehold conversion direct from developers may want to remind them about their VAT windfall, and ask for a price reduction.

It is not all good news on the housing front. The construction of a new house will remain zero-rated, but the definition of construction is being tightened. It will exclude any development where part of a previous building survives above ground level.

This imposition of VAT is due to come into effect later in the year.