My client specialises in bespoke joinery. He has worked on a lot of new houses but has now been asked to work on the renovation of an old country house that has been empty for many years. He will be supplying and fitting replacement sash windows, a staircase and also some fitted furniture in bedrooms and dressing rooms. I am aware of the reduced rate of 5% for renovations to empty residential properties but something is troubling me about fitted furniture, as he has to charge VAT on this in new build houses. Is it the same for renovations and conversions?

You are quite correct to have picked up on the issue of fitted furniture, as it is specifically excluded from the definition of building materials that can be zero rated in new dwellings and reduced rated in conversions and renovations. The other exclusions are carpets, and gas and electrical appliances (other than for heating and ventilation). These are explained in detail in VAT notice 708 section 13:

With the exception of the above exclusions, building materials, for VAT purposes are items which are incorporated in the building or its site, and are of a type which is ‘ordinarily’ incorporated by builders in that type of building.

Where building materials are incorporated in the course of construction of a new dwelling, they are zero rated following the liability of the construction services, and similarly, in a reduced rated project the building materials follow the reduced rate of the work. However, goods which are not building materials must be standard rated both in new-builds and in conversions and renovations.

The fitting of those non-building-materials remains zero rated in new-builds, but it is important to note that there is no reduced rate for the fitting of non-building-materials in a conversion or renovation.

Therefore, when your client does his renovation, both the supply of the fitted furniture and its installation will be subject to VAT at 20%.

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