The VAT regimes that surround the construction, renovating and letting of residential property is extraordinarily complex, with some elements exempt entirely and others charged anywhere between zero and 20 per cent.

The law states that a taxpayer can only claim the VAT that is properly charged, meaning that if the wrong VAT is applied, the amount that can be claimed is restricted.

On top of that, where there has been some construction work done on a property that is to be rented out, the VAT that is charged is not usually recoverable and is a real cost to the rental business. Therefore, minimising the amount that is charged is vital.

VAT exempt
Some rental income is exempt from VAT entirely, including: