VAT rates on recladding works

Where money is being spent on recladding works, it may be possible for this to be at the reduced VAT rate for existing blocks of flats that are being rented out as investments.

There is a 5% VAT rate for the addition of energy saving materials to existing residential dwellings and this includes adding insulation to walls. Whether replacement cladding qualifies as insulation for walls will depend upon its purpose. Cladding may be fixed to a building for various reasons, which could include:

  • Complying with building regulations
  • Protecting against the elements
  • Reducing noise

However, it can only benefit from the reduced rate for energy saving materials if its dominant purpose is to improve the thermal efficiency of the building. While cladding may have the ancillary benefit of improving thermal efficiency (because it is an additional wall covering), that is not sufficient for it to qualify for the reduced rate of VAT.

If you know of any projects where there is recladding needed for residential buildings, our specialist VAT team can discuss this further with you. We can also advise on queries concerning flats (either new build or conversions) that were sold, as opposed to existing blocks that are rented out.

In addition, there could be a saving if you have flats (either new build or conversions) that were newly constructed or converted: the zero or reduced VAT rating may be applicable for replacement cladding under different rules.

For more information, please get in touch with your usual BKL contact or use our enquiry form.

NICOLA HALL

BILSHAN MENSAH

Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.

ELANA DIMMER

Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.

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