Please note, this article only acts as a guide to the VAT situation regarding radiators. This is not a government publication and the rules and regulations are often amended.
Not surprisingly, homebuilders and renovators are always keen to keep the costs down on any project, but this doesn’t just mean shopping around for materials. It can also help to identify any opportunities for reducing your potential VAT bill.
Value Added Tax or VAT is a tax that is levied in the UK on all non-essential items. When building or renovating a house, there are a number of conditions in which you can have the VAT waived on your radiators or claim a refund from the taxman, otherwise known as Her Majesty’s Revenue and Customs.
VAT on your radiators may be zero-rated or refunded if:
1. The radiators are to go in a new build or new extension;
2. The radiators are part of a conversion or renovation; or
3. The radiators are for a listed property.
However, tax is a complicated subject and this issue can be a potential minefield. There are many specific criteria that you and your project need to meet before your purchases including radiators can be classed as VAT exempt.
1. New builds or extensions
In order to be eligible for VAT exemption on materials for a self-build such as radiators, the property or extension you are building must meet all of the following criteria:
· It must be a “dwelling” that you personally will be living in.
· It must be self-contained living accommodation without internal access to other, different dwellings.
· It cannot be sold, leased, rented or used as a B&B.
· It cannot be accommodation that is separate from the main house, if that accommodation could not be sold separately from the main house i.e. granny annexes.
· It cannot be a detached swimming pool, playroom, workshop or similar as these are not classed as “dwellings”.
If your build meets the criteria above, then you may be able claim VAT back on some, but not all, of your costs and purchases for the new build.
VAT can be claimed back on building costs incurred and goods that are provided on a “supply and install” basis. These purchases may include incorporated building materials, fitted furniture and appliances that are built in, wired in or plumbed in including radiators and wired in electric central heating systems.
You cannot claim a VAT refund on appliances that are only “plugged in”, garden items such as sheds or any home furnishings.
So in order to have the VAT zero rated on your radiators, then you need to pay for them along with their installation, otherwise you are not purchasing “fitted” products and VAT is chargeable.
By far, the easiest solution to this is for your tradesperson (builder, plumber, heating engineer, electrician, etc.) to buy and install your new radiators. As long as they are VAT registered, then they may be able to zero rate your bill. They can then claim a VAT refund on your behalf through their own business.
2. Converting or renovating properties
Some costs incurred when converting or renovating properties may be VAT exempt, however a number of rules apply and, in this context, a conversion is not the same as a renovation.
“Conversion” means a property is being changed from non-residential use into a “new dwelling” or has not been used for residential purposes for over 10 years. If this is the case then many of the same rules apply as per “new builds” detailed above. In this situation, costs such as the installation of new radiators may not be VAT exempt but it may be charged at a significantly reduced rate.
“Renovations” are not normally considered new dwellings. They only qualify for a VAT reduction when they have been uninhabited for more than 10 years, so it would be unusual to be able to claim a VAT refund on radiators for a renovation.
Again, merchants cannot zero rate purchases; it is only VAT registered installers that can do this, as they are able to claim the VAT back through their business.
Alternatively, if you would prefer to pay for the goods yourself, then you can personally submit a claim to HMRC for fitted goods that have been installed in the property you are converting or renovating. Only one claim can be submitted following completion of the project and there is usually a time limit on this.
3. Listed properties
If you can get alterations to your listed property approved, then you may, in certain circumstances, be able to claim a VAT refund on some items. Again, the “supply and install” rule applies, so if you wanted to claim the VAT back on radiators for instance, then it is advisable to arrange for them to be purchased and fitted by a VAT registered tradesperson.
Are there any other opportunities for VAT exemption?
Not that we are aware of, however customers do often enquire about other situations where they may believe the goods they purchase such as radiators may be exempt from VAT, but are not; for instance, if a customer is registered as disabled.
If you or a resident of your property is registered as disabled then you may be able to claim the VAT back on work done or products purchased for adaptation of your home. However, these adaptations must be made in order to assist directly in aiding the resident with the disability. Unfortunately, radiators are not classed as directly aiding a disabled person in the management of their disability so therefore radiators are not VAT exempt in this situation.
Consumers also often believe that VAT should not be charged on delivery charges they may incur, but unfortunately, this is not the case. Deliveries are classed as a non-essential service, so VAT is always payable. Some VAT registered companies are not aware of this rule and so, incorrectly, they do not charge VAT on deliveries.
So I am eligible to claim some VAT back, how do I go about this?
So if you meet the criteria as detailed above, and can prove it, then your property may be VAT exempt or you may be eligible to claim the VAT back on qualifying goods and services.
Her Majesty’s Revenue and Customs states that VAT must always be paid at the time of purchase of goods, even if the property qualifies for zero VAT.
You can allow your builder to take on this job if he is VAT registered. If they are purchasing materials on your behalf, then they can zero rate your bill and then claim back the VAT at the end of the project.
If you choose to claim it back yourself, then you need to submit a claim form to HMRC detailing the materials and work you believe should be due a VAT refund.
Please be aware, HMRC imposes strict deadlines for claims and failure to meet these deadlines could result in significant losses for either the homeowner or their contractor.
In summary, VAT costs are often a significant factor when deciding whether or not to undertake a self-build or renovation project. Due to the potential size of the refund you may be entitled to, it is imperative that you contact HMRC directly regarding your particular situation. Information provided can be contradictory and therefore you always need confirmation that you are eligible to claim and what goods and services are VAT exempt. It is also vital that you speak to any potential contractors in advance to ensure that they understand the situation and that they are happy to zero rate where possible.
For more information on claiming VAT back on radiators specifically, then contact a radiator specialist such as Feature Radiators. You can speak to their team in person at their West Yorkshire showroom, call them on 01274 567789 or visit http://www.featureradiators.co.uk/