No. Residential lettings are exempt from VAT, so renting out a house or flat does not require registration and you do not charge VAT on the rent. Exempt rent also does not count towards the £90,000 threshold. Holiday lets, serviced accommodation and commercial property can be different.
Why ordinary rent sits outside VAT
Letting a home on a normal tenancy is an exempt supply. That means no VAT on the rent, and no way to register for VAT because of it. The other side of the coin is that you generally cannot reclaim VAT on costs linked to those lets, such as repairs or agent fees. Those invoices are just costs.
Where VAT does come in
- Holiday lets and short stays. Short-term holiday accommodation is generally standard-rated. That income counts towards the £90,000 registration threshold, alongside any other taxable business you run.
- Commercial property. Rent is exempt unless you choose to "opt to tax" the building. Once you do, you charge 20% on the rent and can reclaim VAT on related costs. The option is hard to undo, so take advice first.
- Mixed portfolios. If you have residential and taxable lets together, you may need to apportion VAT on shared costs.
Worked examples
Three Hove flats on standard tenancies. Total rent is £39,600 a year. No VAT registration, no VAT charged. A £1,200 repair bill arrives with £240 of VAT on it. You cannot reclaim the £240, so the whole £1,440 is your cost.
Two holiday lets and a consultancy. The holiday lets bring in £62,000 and your consulting turnover is £35,000. Taxable turnover is £97,000, over £90,000, so registration is required. The exempt rent from your other flats does not count towards that figure.
What to do
- List every property and label it long-term residential, holiday let or commercial.
- Add up taxable turnover across all your businesses over a rolling 12 months.
- If the total is near £90,000, check it every month.
- Before you opt to tax any building, get the numbers checked.
Common mistakes
- Assuming Airbnb-style income is exempt like a normal tenancy.
- Adding residential rent to the VAT threshold calculation.
- Charging tenants VAT they do not owe.
- Forgetting that a second business can push you over the threshold on its own.
Sources: GOV.UK: VAT registration thresholds
Frequently asked questions
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