5% reduced rate VAT on a barn conversion
The 5% reduced VAT rate applies to qualifying conversion labour under VAT Notice 708. The contractor must hold evidence of the qualifying conversion (planning consent or Class Q prior approval) before invoicing at 5%.
What qualifies
Works that change the number of dwellings, including conversion of a non-residential building to a dwelling, qualify for the 5% rate under VAT Notice 708, section 7. A barn conversion to a single dwelling is a textbook qualifying conversion.
What evidence the contractor needs
- Copy of Class Q prior-approval notice or full planning consent.
- Confirmation that the building has not previously been residential within the last 10 years (the "empty homes" 2-year exception is separate).
- Site address, client identity, scope of qualifying works.
Interaction with VAT431C
5% labour is recovered by the contractor at invoice point (you pay 5% on labour, not 20%). VAT431C reclaim covers the standard-rate VAT on materials at completion. Some materials remain 20% even where labour is 5% (white goods, certain fixtures); the reclaim recovers what HMRC's eligible-materials list allows.