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Introduction

Buying land and building property involves major outgoings. The good news? In many cases, you can reclaim the VAT—if the conditions are right.

Let’s break down how VAT works across:

• Land purchases
• Construction costs
• Professional services

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Reclaiming VAT on Land

You can only reclaim VAT on land if:

✅ VAT was charged by the seller (i.e. they opted to tax)
✅ You are VAT registered
✅ You’re using the land for a taxable supply (e.g. selling or renting commercial property, or building and selling new homes)

🚫 If the land was sold VAT-exempt, you can’t reclaim anything—even if you later develop it.

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Reclaiming VAT on Build Costs

Generally, VAT is reclaimable on:

• Labour from VAT-registered subcontractors
• Building materials
• Equipment and plant hire
• Architect and engineering services
• Site preparation

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Conditions for VAT Recovery

1. You must be VAT registered
2. The project must be for a VATable activity, such as:
   • Selling new residential property (zero-rated)
   • Commercial rental (standard-rated)
3. You must have valid VAT invoices in your business name
4. The property must not be for exempt use, such as long-term residential letting

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When You Might Not Be Able to Reclaim VAT

🚫 If you’re building a home for personal use
🚫 If you’re letting the property long-term (residential)
🚫 If your supplier didn’t charge VAT or isn’t VAT registered
🚫 If you didn’t keep proper invoices

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Tips to Maximise Your Reclaim

✅ Register for VAT early
✅ Let your suppliers know your VAT status
✅ Use construction-specific accounting software
✅ Work with an accountant who understands property

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Conclusion: VAT Planning = Bigger Profits

Smart VAT handling can make the difference between a project that’s profitable—and one that’s not.

📞 Planning a development?
We’ll help you get your VAT position right from day one. Call 0161 989 9560.