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Q&As
What constitutes new build vs rebuild
I have an old bungalow on a site with excellent views. I want to build an extra floor. I get that demolishing and starting again means that the VAT is either not payable or can be reclaimed. But what if i want to use the existing groundworks and foundations. Do i have to rip them out and start again to avoid the VAT?
Any advice much appreciated.
Answers
According to VAT Notice 708, a project counts as a new building if it’s built from scratch and, before construction commences, any pre-existing building is demolished to ground level. However, any cellar, basement and ground floor slab can be retained.
So you should be able to keep the existing foundations and ground floor slab and still benefit from a zero rating for VAT purposes – but it would be a wise move to get confirmation from HMRC that the exact elements you wish to retain are permissible.
The rules also allow you to knock down all but a single facade of the existing house and retain this within the zero-rating framework. However, this only applies in situations where retention of that facade is a condition of your planning consent or a similar process.
Hope that helps!
