Our services · Watford, Bushey & North West London
VAT, CIS, SPVs and stamp duty sorted before you build, not after. For developers across Hertfordshire, North West London and the UK.
Building work on brand new homes is zero-rated for VAT, qualifying conversions are charged at 5% and most refurbishment is 20%. Property developers count as contractors under CIS, companies pay a 5% stamp duty surcharge on residential purchases, and development profit is taxed as trading income, not as a capital gain.
Development is where small tax decisions turn into big numbers. Whether your build costs carry 0%, 5% or 20% VAT, whether you buy personally or through a company, how each scheme is structured and whether the profit is taxed as trading income or a capital gain usually get decided early, often before an accountant is even involved. Get them right at the start and the margin is protected. Get them wrong and it shows up on completion.
We work with developers and builders across Bushey, Watford, Harrow, Radlett and North West London, from a first conversion to multi-unit schemes run through SPVs. We set up the structure, keep the VAT treatment right on every invoice, run CIS for your subcontractors, track costs project by project in Xero, and handle the year-end accounts and corporation tax.
| Building work on a brand new home | 0% VAT |
| First sale or long lease of a new or converted home by the developer | 0% VAT, which lets you reclaim VAT on costs |
| Qualifying conversion works (non-residential to homes, or changing the number of homes) | 5% VAT |
| Renovating a home that has been empty for two years or more | 5% VAT |
| Most refurbishment of an existing home | 20% VAT |
| Stamp duty surcharge on residential property bought by a company | 5% on top of standard rates |
| Stamp duty on homes over £500,000 bought by a company | 17% flat rate, unless a relief applies (including for developers) |
| CIS status for property developers | Mainstream contractor: register, verify, deduct, file monthly |
| Corporation tax on development profits | 19% to 25%, with marginal relief in between |
Most of the tax on a development is fixed by decisions made at purchase:
A company pays corporation tax at 19% to 25% on development profit, compared with income tax of up to 45% if you develop personally. But getting that profit out of the company costs dividend tax, and residential purchases by companies carry the 5% stamp duty surcharge. Several SPVs owned by the same people also share the corporation tax thresholds between them.
There's no single right answer, only the right answer for your scheme, and it's far cheaper to work out before exchange than after completion.
The VAT rate on building work depends on what the finished building is and what it was before. It doesn't depend on what your builder decides to charge.
Selling, or granting a long lease of, a new or converted home is also zero-rated. That's what lets a developer register for VAT and reclaim the VAT paid on costs. Miss it, and the VAT becomes a straight cost on the scheme.
We check the treatment before contracts are signed, and make sure your builders invoice at the right rate from the first payment. For ongoing returns, see our VAT returns service.
In most cases, yes. Property developers count as mainstream contractors under CIS. So if you pay subcontractors for construction work, you need to register as a contractor, verify each subcontractor with HMRC, deduct 20% from the labour element (or 30% if they can't be verified) and file a return by the 19th of every month.
Usually 5% on the building work for a qualifying conversion. That covers turning a non-residential building into homes, changing the number of homes in a building, and renovating a home that has been empty for two years or more. Selling the finished homes as the developer is zero-rated. Refurbishing an existing home that doesn't meet those conditions is generally 20%. The conditions are strict and HMRC expects evidence, so check before work starts.
Often, yes. A separate company for each scheme keeps the risks apart, is what many development lenders expect, and makes it cleaner to bring in partners or exit. The trade-off is extra accounts and admin for each company, and SPVs under common control share the corporation tax thresholds. It depends on the size and number of schemes, so we work it through with you before you buy.
Yes, if you're VAT registered and the first sale or long lease of the new homes is zero-rated. You can then reclaim the VAT on your costs. If you plan to rent the homes out instead, the letting is exempt from VAT, so that VAT generally can't be recovered. That's why the plan to sell or hold matters from day one.
If you buy a property to develop and sell, HMRC treats it as a trade. The profit is taxed as income, or as company profit through corporation tax, not as a capital gain. If you buy to hold and let, a later sale is usually a capital gain. Your intention at the time of purchase matters, so it's worth recording it clearly.
Yes. Companies pay a 5% surcharge on top of the standard residential rates. A flat 17% applies to homes over £500,000 unless a relief is available, such as relief for property developers buying to develop and sell. The relief has conditions and can be withdrawn if the property is used differently within three years.
We provide accounting for property developers across Watford, Bushey, Harrow, Radlett and North West London. Related services: CIS for Construction · VAT Returns and Registration · Corporation Tax · Company Accounts · Bookkeeping and Making Tax Digital.
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