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How can landlords avoid paying extra VAT come January?

November 26th, 2010

Landlords have been given some valuable advice about how to keep the cost of home maintenance work down after the VAT rate rises to 20 per cent in January 2011.

Most contractors charge VAT on top of their rates and the extra 2.5 per cent could add a healthy sum onto their bills come next year. This is concerning many buy-to-let property owners, particularly those without landlord insurance.

Ian Rumsam, of Prospect Homes, is urging landlords and other homeowners to do more of the work themselves to avoid having to pay out for the extra VAT. He is also urging the contractors themselves to absorb the extra VAT in their charges to avoid losing customers.

Some landlords may be entitled to exemption from paying VAT and anyone who thinks they may fall into this category should find out if they are eligible before paying the extra 2.5 per cent. Website, Inside Housing, explained, "Partial exemptions apply when landlords offer activities in addition to social renting."

Landlords with rented property insurance need not worry too much about the VAT increase as the cost of building work will be covered by their policy in many cases.

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