VAT on holiday lets

[Agrivator]

We are currently renovating a property on the farm to bring it up to an acceptable standard for holiday lets as part of the farm business. And the higher the rents achievable, the higher the income tax revenue for HMRC.

No VAT will be added to the rent, so obviously we will be unable to reclaim VAT on any expenditure once the property is in a fit state to be let.

My question is: can any of the VAT on the initial renovation costs be reclaimed?

 

[Farfrae]

The question is 'above my pay grade' but here is some info to start the ball rolling.

Business Clinic: What VAT applies to holiday let conversion? - Farmers Weekly

Whether you have a legal, tax, insurance, management or land issue, Farmers Weekly’s Business Clinic experts can help. Here, Mark Chatterton of accountant

www.fwi.co.uk

StackPath

 

[Muddyroads]

Accountants advice to us when we set up our holiday let was that as it’s part of the farm business, we’ll have to deduct VAT from income, but can obviously claim back VAT on inputs. Unless absolutely everything to do with the holiday let is separate from the farm business, including use of computers etc., then it can apparently be argued by HMRC that VAT will apply. We operate through Airbnb, and although it’s frustrating to see 20% being deducted from all income, it does mean that visitors who are using it as a work base in the week can reclaim the VAT element.

 

[Poncherello1976]

Obviously speak to an expert, but you may get away with only paying 5% VAT on some bits of it.

 

[Exfarmer]

Is this a property classed as a house, or are you converting a barn to a house.
if the latter ie conversion yes you can reclaim the VAT.
if the property is already a house and you are modernising it to let, then you can do so but you must charge VAT on the rent.
however once modernised, you could sell the property at the market price to a new business, but must charge 20% on the sale VAT. The new business then could operate under the tax threshold.
however I am not an expert and would advise you to speak to an accountant as there could be other ways round or possible pitfalls