Industry sector: Consumer services

Residential lettings: VAT


Residential lettings and VAT

The letting of dwellings (including garages and outbuildings) for permanent residential use is normally exempt for VAT purposes. This means that you do not add any VAT to the rents you charge and you are not able to recover the VAT you pay on goods or services for your rental properties.

Exemption also applies to any service charges you might make, for example for the upkeep of common areas in multi-occupied accommodation. The service charge is treated as ancillary to the main supply of exempt domestic accommodation.

Making Tax Digital (MTD) for VAT

Under HMRC's Making Tax Digital initiative, VAT-registered businesses with taxable turnover above the VAT threshold must keep records digitally and use special software to submit their VAT returns. You can find out more about MTD on the Gov.uk website.

Further information

You can contact the VAT Helpline on 0300 200 3700 for further guidance and there are also helpful leaflets available including VAT Notice 700, Should I be Registered for VAT? and VAT Notice 742, Land and Property which you can download from the Gov.uk website.