If you’re a landlord with buildings and land, chances are you’ve heard about option to tax. This can be a complicated area, but at Dyer & Co, we can explain this topic to you in detail to give you a clear understanding of your options or obligations.

A richer understanding

The amount of VAT attached to transactions for land and property is often significant, which means getting to grips with the principles of option to tax is a very wise move. There are many different forms around relating to various different circumstances, so the right document for one landlord could be completely wrong for another. If you do fill in the wrong option to tax form, you could find yourself making expensive mistakes and spending more time than you’d like dealing with HMRC.

Need to recover VAT?

Once you have made an option to tax election it will last for two decades. This means this isn’t a decision you should make lightly. Most property transactions are exempt from VAT, but some businesses do choose to charge VAT on sales and rentals of commercial properties. The main reason a supplier would choose an option to tax is to recover VAT on associated costs. This means changing an exempt supply which you won’t be able to recover VAT on into a taxable supply so VAT can be gained.

Should I opt to tax?

The vast majority of businesses don’t need or choose to tax their trading premises. However, if you are renting or selling trading premises, there are some circumstances in which you may wish to opt to tax. Perhaps you’ve bought a new business property and wish to rent it out. As it is a new commercial property, you will be charged VAT. Rent it out without opting to tax and you won’t be able to claim the VAT back. If you do opt to tax, you will need to charge the tenant VAT. However, when you opt to tax, you can get your cash back. In fact, you may also be able to claim ongoing expenses and other associated costs. If or when you sell the property you will need to charge the buyer VAT.

Avoiding unforeseen costs

A large number of landlords have been left out of pocket when buying and selling properties, but if you opt to tax a property even just before you sell it, you may be able to avoid nasty surprises. We can assist you if you do have any questions about option to tax and completing the relevant form VAT 1614A.

Get all the tax advice you need


At Dyer & Co, we’re a professional team of Chartered Accountants that can help you save money whilst complying fully with legislation and staying on the right side of the law. You can count on us to deliver the highest standards of service and support you in various aspects of your financial affairs including VAT, payroll, accounts, compliance and more. We can take on a wide variety of financial and administrative tasks on your behalf and provide you with all the financial and accountancy advice you require.

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